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William F. Sharpe says that his baby, the Capital Asset Pricing Model, is due for an extreme makeover. I think we ought to pay attention. This model is the bedrock of much of modern finance.

Sharp's new book, "Investors and Markets: Portfolio Choices, Asset Prices and Investment Advice," argues in favor of a "state/preference" approach instead of the fancy math of his "mean-variance" method.

Pensions and Investments has the details (Hat Tip: All About Alpha).

Posted by edelfenbein at October 14, 2006 12:23 PM