Black-Litterman Model
A method that blends market-implied returns with your own opinions about which assets will do better, producing more intuitive portfolios than raw mean-variance.
Category: Optimizer & Performance
What is Black-Litterman Model?
Developed by Fischer Black and Robert Litterman at Goldman Sachs, this Bayesian approach starts from equilibrium returns implied by the market portfolio, then tilts those returns toward investor views with a confidence weighting. The result avoids the extreme corner allocations that plague pure mean-variance.