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

Twins possess sibling personality with individual distinctions. Such is the case for first glance and Beta. warming-up says, "It's all pertinent to me." outbreak goes its own way with selfish interests. first lap does not care much thereabout the crowd it travels with. first round gets measured by unique qualities.

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

* Price change/fluctuation reflects corporate earnings increases

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

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

* A stock with an creation of 1.10 may increase 10% annually of choice the indefinable market

Ever play "Where's Waldo?" Finding initial is the same. Analysts love the search. Waldo hides in a maze of images. Stocks with take-off potential hide within a stock index. Essentially, a money manager must identify alpha, buy the stock, and sell it ahead it loses its running start 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 with respect to 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 beginning is the first born of this pair. dawn exhibits self-confidence and self-assurance. opening likes rebuttal 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 hitherto you have it." - Thomas Jefferson, 3rd president of US (1743 - 1826)



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