NAILA NASYWA ISTIQOMAH

X MIPA 1
Blue : Simple past tense
Green : Present perfect tense

THE BIOGRAPHY OF HARRY MARKOWITZ

Harry Markowitz was born to a Jewish family, the son of Morris and Mildred Markowitz.
During high school, Markowitz developed an interest in physics and philosophy, in particular
the ideas of David Hume, an interest he continued to follow during his undergraduate years
at the University of Chicago. After receiving his B.A., Markowitz decided to continue his
studies at the University of Chicago, choosing to specialize in economics. There he had the
opportunity to study under important economists, including Milton Friedman, Tjalling
Koopmans, Jacob Marschak and Leonard Savage. While still a student, he was invited to
become a member of the Cowles Commission for Research in Economics, which was in
Chicago at the time.

Markowitz chose to apply mathematics to the analysis of the stock market as the topic for
his dissertation. Jacob Marschak, who was the thesis advisor, encouraged him to pursue the
topic, noting that it had also been a favorite interest of Alfred Cowles, the founder of the
Cowles Commission. While researching the then current understanding of stock prices,
which at the time consisted in the present value model of John Burr Williams, Markowitz
realized that the theory lacks an analysis of the impact of risk. This insight led to the
development of his seminal theory of portfolio allocation under uncertainty, published in
1952 by the Journal of Finance.

In 1952, Harry Markowitz went to work for the RAND Corporation, where he met George
Dantzig. With Dantzig’s help, Markowitz continued to research optimization techniques,
further developing the critical line algorithm for the identification of the optimal mean-
variance portfolios, relying on what was later named the Markowitz frontier. In 1955, he
received a PhD from the University of Chicago with a thesis on the portfolio theory. The
topic was so novel that, while Markowitz was defending his dissertation, Milton Friedman
argued his contribution was not economics. During 1955–1956 Markowitz spent a year at
the Cowles Foundation, which had moved to Yale University, at the invitation of James
Tobin. He published the critical line algorithm in a 1956 paper and used this time at the
foundation to write a book on portfolio allocation which was published in 1959.

Markowitz won the Nobel Memorial Prize in Economic Sciences in 1990 while a professor of
finance at Baruch College of the City University of New York. In the preceding year, he
received the John von Neumann Theory Prize from the Operations Research Society of
America (now Institute for Operations Research and the Management Sciences, INFORMS)
for his contributions in the theory of three fields: portfolio theory; sparse matrix methods;
and simulation language programming (SIMSCRIPT). Sparse matrix methods are now widely
used to solve very large systems of simultaneous equations whose coefficients are mostly
zero. SIMSCRIPT has been widely used to program computer simulations of manufacturing,
transportation, and computer systems as well as war games. SIMSCRIPT included the Buddy
memory allocation method, which was also developed by Markowitz.

The company that would become CACI International was founded by Herb Karr and Harry
Markowitz on July 17, 1962 as California Analysis Center, Inc. They helped develop
SIMSCRIPT, the first simulation programming language, at RAND and after it was released to
the public domain, CACI was founded to provide support and training for SIMSCRIPT.

In 1968, Markowitz joined Arbitrage Management company founded by Michael Goodkin.

Working with Paul Samuelson and Robert Merton he created a hedge fund that represents
the first known attempt at computerized arbitrage trading. He took over as chief executive
in 1970. After a successful run as a private hedge fund, AMC was sold to Stuart & Co. in
1971. A year later, Markowitz left the company.

Markowitz is co-founder and Chief Architect of Guided Choice, a 401 managed accounts
provider and investment advisor. Markowitz’s more recent work has included designing the
backbone software analytics for the Guided Choice investment solution and heading the
Guided Choice Investment Committee. He is actively involved in designing the next step in
the retirement process: assisting retirees with wealth distribution through Guided Spending.