Test whether the proposed allocation still works when correlations rise.

Family Office Private Wealth Journal · Editorial research desk · 2 November 2026

Companion to PORTFOLIO SELECTION by Harry Markowitz.

Decision in practice

Three funds with different labels all depend on the same equity market. Treating each as a separate diversifier understates the family’s economic exposure.

Committee assignment

Translate holdings to common risk exposures. Recompute portfolio risk with higher correlations and a concentrated operating-company stake before selecting weights.

Record and decision rule

Keep the assumptions alongside the proposed allocation. Reopen the decision if a modest change produces a radically different portfolio.

Illustrative application by the editorial desk. The source authors did not evaluate or endorse this procedure.