The Markowitz model  put forward by Harry Markowitz in 1952  is a portfolio optimization model,it assists in the selection of the most efficient portfolio by analyzing various possible portfolios of the given securities. Here, by choosing securities that do not 'move' exactly together, the HM model shows investors how to reduce their risk.

Markowitz made the following assumptions while developing the HM model:

1. Risk of a portfolio is based on the variability of returns from said portfolio.
2. An investor is risk average.
3. An investor prefers to increase consumption. 
4. The investor's utility function is concave and increasing, due to their risk aversion and consumption preference.
5. Analysis is based on single period model of investment. 
6. An investor either maximizes their portfolio return for a given level of risk or minimizes their risk for a given return.
7. An investor is rational in nature.

To choose the best portfolio from a number of possible portfolios, each with different return and risk, two separate decisions are to be made, detailed in the below sections:

1. Determination of a set of efficient portfolios.
2. Selection of the best portfolio out of the efficient set.