In response to:

The Death of Modern Investment Theory

MoreFreedom Wrote: Dec 11, 2012 6:21 PM
"...with the current blitzkrieg of high-frequency trading does anyone still believe that the financial markets are efficient or that investors are rational?" Yes, I do. High frequency trading improves liquidity. Obviously what is rational to one investor is irrational to another (e.g. the guy who buys GM stock and the guy who sold it). But Lisa is also correct. Government now controls commerce so much, that the best bets are based on knowing what our legislators/regulators will be doing. Thus, congressmen exempt themselves from insider trading laws, saying they've no fiduciary duty to the company/industry, of which they control via regulation. It's no wonder they do so well in the stock market.

Regarding Harry Markowitz’s Modern Portfolio Theory (MPT), at what point do we throw in the towel, give up the ghost, or even call it a day? 

Markowitz, in his quest to deliver an understandable doctorate thesis, used lines, dots, and all sorts of machinations in order to prove that investors were rational and that financial markets were efficient. 

He dealt with diversification while theorizing that a collective group of assets had inherently less risk compared to owning the very same assets individually. 

In fact, most of the asset allocation models...