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The Beginnings Of A ‘Common-Sense’ Approach To Portfolio Theory By Nineteenth-Century French Financial Analysts Paul Leroy-Beaulieu And Alfred Neymarck

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  • Edlinger, Cécile
  • Parent, Antoine

Abstract

This article is an addition to the revisited history of financial economics. While Markowitz (1952, 1959), Roy (1952), and Tobin (1958) are recognized as the founding fathers of Modern Portfolio Theory, we recall that its origins should be traced prior to 1914. We consider two, turn-of-the-century, French, financial analysts and suggest that notions such as risk aversion and risk premium, international diversification and correlation, specific and systematic risks and arbitrage were common sense for Leroy-Beaulieu (1906) and Neymarck (1913). The contribution of these authors to the development of Modern Portfolio Theory—long before the 1950s—should not be underestimated.

Suggested Citation

  • Edlinger, Cécile & Parent, Antoine, 2014. "The Beginnings Of A ‘Common-Sense’ Approach To Portfolio Theory By Nineteenth-Century French Financial Analysts Paul Leroy-Beaulieu And Alfred Neymarck," Journal of the History of Economic Thought, Cambridge University Press, vol. 36(1), pages 23-44, March.
    • Handle: RePEc:cup:jhisec:v:36:y:2014:i:01:p:23-44_00
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    Cited by:

    1. Cécile EDLINGER & Maxime MERLI & Antoine PARENT, 2018. "Financial Diversification before WW1 : A Risk/Return Analysis of Portfolio’s Advice of French Financial Analyst Alfred Neymarck," Working Papers of LaRGE Research Center 2018-03, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    2. Jovanovic, Franck & Schinckus, Christophe, 2017. "Econophysics and Financial Economics: An Emerging Dialogue," OUP Catalogue, Oxford University Press, number 9780190205034.
    3. Maxime MERLI & Antoine PARENT, 2022. "Portfolio Diversification During the Belle Époque: When the Actual Portfolios of French Individual Investors Met Behavioral Finance," Working Papers of LaRGE Research Center 2022-01, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.

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