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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

Author

Listed:
  • Cécile Edlinger

    (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique)

  • Antoine Parent

    (LET - Laboratoire d'économie des transports - UL2 - Université Lumière - Lyon 2 - ENTPE - École Nationale des Travaux Publics de l'État - CNRS - Centre National de la Recherche Scientifique, IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon)

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. [ABSTRACT FROM PUBLISHER]

Suggested Citation

  • Cécile Edlinger & Antoine Parent, 2014. "The beginnings of a ‘common sense’ approach to portfolio theory by nineteenth century French financial analysts Paul Leroy-Beaulieu and Alfred Neymarck," Post-Print halshs-01077416, HAL.
    • Handle: RePEc:hal:journl:halshs-01077416
    DOI: 10.1017/S1053837214000017
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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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