expected return assumptions for all assets and on the use portfolio optimizers. SUMMARY Risk is a scarce resource that needs to be allocated in ways that maximize expected return. The single condition that characterizes optimal portfolios is that at the margin the ratio of the change in expected excess return to the contribution to portfolio risk must be the same for every asset or investment activity. Marginal contributions to portfolio risk can be measured relatively easily. Together with an expected excess return assumption for one asset class, they determine a set of implied views for all other asset classes. Implied views provide a set of hurdle rates that can guide portfolio decisions. When the hurdle rates seem to be unreasonably low or high they are useful signals that positions should be either increased or decreased. The position in an asset that minimizes portfolio risk is an important location, and is not typically zero. Weights greater than the risk-minimizing position represent bullish views; weights that are less than the risk-minimizing position represent bearish views. Counterintuitive positions, those between zero and the risk-minimizing position, represent opportunities for most investors to add value. Most likely, the investor faced with such a situation will want to increase the size of the position until it is at least larger in absolute value than the risk-minimizing position, perhaps much larger.