MARKOWITZ’S MODEL FOR THE SELECTION OF INVESTMENT PORTFOLIOS

Abstract

Internet access has fueled interest in investments. Now, it is possible to carry them out with company applications in real time from a smartphone. Within this strategy, there is a process to choose where to invest the money with the highest return and the lowest possible risk. In other words, the problem of optimizing investment portfolios is implicitly solved. The first person who raised the problem of their selection mathematically was Harry Markowitz, who published, in the 1950s, a model that optimizes investment portfolios. The objective of this work is to explain the model proposed by Harry Markowitz and present it through Excel for two actions: Amazon and Apple. The elements used by the model were: covariance matrix, variance and standard deviation; this allows minimizing the risk and knowing the precise investment percentage of each action. With the help of Excel, it is possible to graph the behavior of investment portfolios.