A Simple Study of the Applicability of the Markowitz Model in the Current Stock Market

Abstract

The Markowitz model is widely used in the field of investment. The Markowitz model is a venture capital model proposed by Markowitz in 1952, and it is also called the mean-variance model. In the Markowitz model, the risk is defined as the volatility of the expected rate of return. This is the first time in the history of investment model research that the method of mathematical statistics is applied to the research of portfolio selection. This paper builds a portfolio based on the Markowitz model and studies the performance of the mean-variance model in practical applications by analyzing the process of solving the optimal portfolio problem. Finally, it is concluded that although the mean-variance model can solve investors' investment problems to a certain extent, it also has some shortcomings. For example, the calculation is too complicated, or the application environment is too ideal. Finally, suggestions for improvement are put forward on this basis, and future research directions are explained.