Modern portfolio theory, according to its founder, Harry Markowitz, equates risk with "variance of returns.
"[1] Principled reasoning offers a critique of modern portfolio theory and its related departure from classical economics in evaluating markets in isolation from production and consumption.
Principled reasoning contrasts with modern portfolio theory's Humean skepticism,[3] drawing instead on the Sermon on the Mount.
Principled reasoning holds that a community which honors the proper cultural, legal, and economic principles is like a house built on rock, which puts it at an inherently lower level of risk, while a community which does not honor the proper principles is like a house built on a foundation of sand, and is at inherently higher risk.
[4] Principle reasoning is associated with the economist Jerry Bowyer, investment strategist Vince Birley, and theologian Ken Boa, who presented the idea at the annual conference of Kingdom Advisors and collaborated on a book on the subject.