Investors often think of portfolio theory as being a modern phenomenon.

After all, it is commonly referred to as “Modern Portfolio Theory”, or MPT for short.

You can read volumes of books, magazines, newsletters and educational papers all devoted to MPT. Television, the internet, radio and a variety of print media cater to MPT. Today, professionals and investors have a large basket of MPT tools to analyze, benchmark, select, monitor and attend to every conceivable portfolio requirement. It's quite easy to be swamped in MPT.

However, I have a little different perspective. Modern portfolio theory is not that modern, and you don't have to be swamped.

In fact, it has a long and rich history spanning centuries. In addition, the fundamentals have remained much the same.

Not long ago, I was revisiting some of the plays I had studied in high school. One was “The Merchant of Venice”, a comedy written around four hundred years ago by William Shakespeare.

I discovered one paragraph that ought to interest every investor. A very insightful paragraph.

Let's turn back the clock to the days of Shakespeare and focus on the words of Antonio, the Merchant of Venice, spoken early in Scene 1 on a street in Venice:

SALARINO

But tell not me; I know, Antonio
Is sad to think upon his merchandise.

ANTONIO

Believe me, no: I thank my fortune for it,
My ventures are not in one bottom trusted,
Nor to one place; nor is my whole estate
Upon the fortune of this present year:
Therefore my merchandise makes me not sad.

Stop the presses right there. Shakespeare would have made a very insightful investment advisor. I would hire him today to dispense the same eloquent advice to my clients.

Even four hundred years ago, Shakespeare recognized the benefits of diversification. Antonio's portfolio had various ships, going to several destinations with different cargo.

So you ask, what can we learn from past investment practices? Here are a few:

• Don't reinvent the investment wheel. There is a saying about the more things change, the more they stay the same. The situation is not so different today, if at all.
• The investment wisdom of long ago still applies today. Antonio's approach is still good advice now. Vintage portfolio theory at that, but very modern for its day.
• Diversification in time, cargo and ports of call is still basic investment necessity. Minimizing unnecessary risks and attention to asset mix assist your portfolio quests.
• Heed the savvy words of Shakespeare. Add a sprinkle of capital preservation along the journey. That way your portfolio won't make you sad either, just like Antonio's.

You are in the marathon of investing. The slow and steady path to accumulating your nestegg has worked very well for centuries.

The vast MPT tools of today make it easier to deal with your portfolio. However, the fundamentals of managing your portfolio have remained much the same.

Shakespeare's investment wisdom has truly withstood the tests of time. Something all portfolios can aspire to.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.