Alpha and Beta: The Romulus and Remus Investment Twins



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Summary:
Alpha gets measured by unique qualities.

* Investment jargon defines Alpha as A measure of a stocks price fluctuation

* Price change/fluctuation reflects corporate earnings increases

* Earnings momentum: it's all about money, corporate earnings

* Price momentum: a stock or group of stocks increase value above market or index averages

* A stock with an alpha of 1.10 may increase 10% annually above the broad market

Ever play "Where's Waldo?"


Article:

Romulus and Remus are the eponym of Rome as dawning and Beta are the eponym of investing. Romulus and Remus are the mythical twins of Rome; gambit and Beta are the non-fictional twins of advantage management. Story tellers tell us that Romulus and Remus were suckled by a wolf. Analysts tell us that investors get raised by a bull (a lot of "bull") and a bear.

Twins possess sibling personality with individual distinctions. Such is the case for setting in motion and Beta. starting point says, "It's all just about me." gambit goes its own way with selfish interests. foundation does not care much not far from the crowd it travels with. foundation gets measured by unique qualities.

* Investment jargon defines cutting edge as A measure of a stocks price fluctuation

* Price change/fluctuation reflects corporate earnings increases

* Earnings momentum: it's all in reverse money, corporate earnings

* Price momentum: a stock or group of stocks increase value atop market or index averages

* A stock with an gambit of 1.10 may increase 10% annually rare the free-speaking market

Ever play "Where's Waldo?" Finding le premier pas is the same. Analysts love the search. Waldo hides in a maze of images. Stocks with first blush potential hide within a stock index. Essentially, a money manager must identify alpha, buy the stock, and sell it foremost it loses its oncoming momentum. None too easy!

Beta is the other twin. Much more sensitive than Alpha. A stock with a high beta becomes downright indignant and emotional. A beta of 1.5 means the stock price will fluctuate 50% more than a market index. A stock with a low beta possesses a reserved nature. It just follows the crowd.

* Investment jargon defines Beta as Beta measures a stocks up or down movement despite a family or index of stocks

* Low beta suggests low risk, and high beta says, "I'm emotional or volatile."

* Beta likes company; it finds relevance in a group of stocks rather than by itself.

* Portfolios with high beta have more risk

Seems to me that send-off is the first born of this pair. dawn exhibits self-confidence and self-assurance. jump-off likes challenge the trend; Beta seems to either get upset or bored. Despite such eccentricities the Romulus and Remus investment twins do what they are made to do: they measure stock and portfolio risk and return.

"Never spend your money till you have it." - Thomas Jefferson, 3rd president of US (1743 - 1826)



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