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Question text When applying the traditional mean-variance portfolio optimization in practice in asset allocation, investors face some major challenges, such as the issue identified below:
Question text When applying the traditional mean-variance portfolio optimization in practice in asset allocation, investors face some major challenges, such as the issue identified below: The mean-variance optimization process is extremely sensitive to uncertain inputs, which may lead to error maximizing. For this major issue identified above, describe and explain one alternative asset allocation method that may mitigate or solve that issue in practice.
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