[Verse 1] Picture returns scattered wide across the field Some investments soar while others barely yield But Harry Markowitz found the secret key Combine them smart and watch efficiency The frontier curves like a rainbow in the sky Each point shows risk and reward up high Minimum variance sits at the bottom left Maximum return without the theft [Chorus] Efficient frontier, show me the way Risk and return in perfect display Beta measures systematic swing While alpha proves you're managing Mean-variance optimization Builds the portfolio foundation CAPM's line cuts through the noise Smart diversification is the choice [Verse 2] Capital allocation draws the steepest slope From risk-free rate to the tangent point of hope That's your optimal risky combination Before you add your cash allocation Systematic risk affects us all Market crashes make portfolios fall But unsystematic fades away When diversification saves the day [Chorus] Efficient frontier, show me the way Risk and return in perfect display Beta measures systematic swing While alpha proves you're managing Mean-variance optimization Builds the portfolio foundation CAPM's line cuts through the noise Smart diversification is the choice [Bridge] Fama-French adds size and value factors in Small caps and cheap stocks help portfolios win Carhart throws momentum in the mix While APT uses many tricks Tracking error shows how far you stray Information ratio shows if it pays Active share reveals your true conviction Risk budgeting guides every prediction [Verse 3] Security market line plots beta's game High beta stocks feel market's pain and gain But behavioral bias clouds our sight Overconfidence dims analytical light Home bias keeps us close to shore While herding makes us follow more Anchoring traps us in the past Mental accounting makes errors last [Chorus] Efficient frontier, show me the way Risk and return in perfect display Beta measures systematic swing While alpha proves you're managing Mean-variance optimization Builds the portfolio foundation CAPM's line cuts through the noise Smart diversification is the choice [Outro] From Markowitz to modern day Portfolio theory lights the way Risk and return in perfect balance That's the art of portfolio talents
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