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Financial Diversification before WW1 : A Risk/Return Analysis of Portfolio’s Advice of French Financial Analyst Alfred Neymarck


  • Cécile EDLINGER
  • Maxime MERLI

    () (LaRGE Research Center, Université de Strasbourg)

  • Antoine PARENT


In this paper, we propose an original analysis of advice given by financial analysts prior to WW1. Our paper focuses on the writings of A. Neymarck, one of the most popular French analysts in the early 20th Century. The creation of portfolios from a new database composed of the monthly returns of all the security types listed on the Paris Stock Exchange from 1903 to 1912 has provided results demonstrating that Neymarck correctly identified the risk in various sectors. The performances of the portfolios built according to Neymarck’s guidelines reveal the ranking announced by the analyst, both in terms of risk and in terms of return: the richer the investor, the riskier and the more profitable his portfolio was seen to be. Finally, the construction of optimal portfolios according to the Modern Portfolio Theory enables us to pinpoint the few imperfections of Neymarck’s advice, which nevertheless appears to be driven by solid financial analysis.

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  • Cécile EDLINGER & Maxime MERLI & Antoine PARENT, 2018. "Financial Diversification before WW1 : A Risk/Return Analysis of Portfolio’s Advice of French Financial Analyst Alfred Neymarck," Working Papers of LaRGE Research Center 2018-03, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
  • Handle: RePEc:lar:wpaper:2018-03

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    References listed on IDEAS

    1. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    2. William F. Sharpe, 1963. "A Simplified Model for Portfolio Analysis," Management Science, INFORMS, vol. 9(2), pages 277-293, January.
    3. Bignon, Vincent & Miscio, Antonio, 2010. "Media bias in financial newspapers: evidence from early twentieth-century France," European Review of Economic History, Cambridge University Press, vol. 14(03), pages 383-432, December.
    4. Le Bris, David & Hautcœur, Pierre-Cyrille, 2010. "A challenge to triumphant optimists? A blue chips index for the Paris stock exchange, 1854–2007," Financial History Review, Cambridge University Press, vol. 17(02), pages 141-183, October.
    5. Parent, Antoine & Rault, Christophe, 2004. "The Influences Affecting French Assets Abroad Prior to 1914," The Journal of Economic History, Cambridge University Press, vol. 64(02), pages 328-362, June.
    6. Cécile Edlinger & Maxime Merli & Antoine Parent, 2011. "An optimal world portfolio on the eve of World War One: Was there a bias to investing in the New World rather than in Europe?," Working Papers 11-05, Association Française de Cliométrie (AFC).
    7. Edlinger, Cécile & Parent, Antoine, 2014. "The Beginnings Of A €˜Common-Sense’ Approach To Portfolio Theory By Nineteenth-Century French Financial Analysts Paul Leroy-Beaulieu And Alfred Neymarck," Journal of the History of Economic Thought, Cambridge University Press, vol. 36(1), pages 23-44, March.
    8. repec:cup:jechis:v:78:y:2018:i:02:p:435-471_00 is not listed on IDEAS
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    More about this item


    Portfolio advice; Efficiency; Financial Markets prior to WW1;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913

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