A 25-page paper proved mathematically why diversifying investments lowers risk for free

In 1952, Harry Markowitz published 'Portfolio Selection,' showing that combining assets whose prices don't move in lockstep can lower a portfolio's overall risk without sacrificing expected return — a free lunch investors had sensed but never proven. The paper became the mathematical foundation of Modern Portfolio Theory and reshaped how pension funds, banks and index funds build portfolios. Markowitz shared the 1990 Nobel Prize in Economics for the work.

— Harry Markowitz, Portfolio Selection — The Journal of Finance, 1952