This lecture, delivered by Professor Jake Xia to  MIT OpenCourseWare class, provides a comprehensive and critical application-based perspective on portfolio management, moving beyond traditional theoretical frameworks to address the realities of investment and risk. Executive Summary: Portfolio Management Beyond Theory This presentation offers a rigorous, application-focused deep dive into modern portfolio management, critically evaluating established theories and proposing practical, behavioral-based enhancements. The central challenge in investing is fundamentally a sizing problem: determining how much capital to allocate to any given investment, a decision dictated by clear objectives, time horizon, and loss tolerance. The lecture contrasts personal finance with institutional investing, highlighting the Endowment Model used by perpetual funds like MIT's. These institutions have a crucial nominal return target (e.g., 8%) to cover spending and inflation, compelling them toward diversified strategies managed by specialized experts, often incorporating high-risk, high-return private assets. A major focus is the inadequacy of Modern Portfolio Theory (MPT). While MPT mathematically defines the benefits of diversification...