A Review of a Summer Internship at First Union Securities : A Focus on Modern Portfolio Theory and Risk Management in the Financial Securities Markets

Abstract

The author describes his internship with First Union Securities in Las Vegas, Nevada and focuses on Modern Portfolio Theory, an investment strategy that strives to maximize returns or minimize risk. Harry Markowitz founded the Modern Portfolio Theory in 1952 and it eventually ended up winning him the Nobel Prize in economics. The Modem Portfolio Theory relies on the efficient frontier, which is a set of possible outcomes pairing risk versus return. It is known that the higher the returns the more the risk. Therefore, risk averse people should shy away from assets with the possibility of super high returns. Contrary, someone who is a risk lover ought to go after the higher return, because in theory they are more likely to be able to stomach the risk. The author describes clients who were more worried about wealth conservation than wealth creation; hence they were more of the moderate growth or conservative growth type of investors.