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Derivatives Videos 155 videos

Finance: What is speculation?
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Finance: What is a High Alpha Investor? 5 Views


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What is a High Alpha Investor? A high alpha investor invests in securities with alpha values of 1 or higher. This means that the mutual fund or stock has outperformed its benchmark index by 1% or more.

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Transcript

00:00

Finance a la shmoop what is a high alpha investor? alpha dogs you know um fear em, [Arrow points to dogs]

00:10

love em feed em alpha is good okay okay more specifically it's an

00:15

investing term synonymous with smart if you have lots of alpha then you are

00:20

smarter than the market so a high alpha investor is someone who beats the market

00:25

while taking low risk ie not a lot of leverage not super volatile

00:31

stocks per se or crazy categories like crypto currencies and they didn't just

00:35

go by 20 bucks of California lottery tickets and then win alpha is well

00:40

kind of a newish term in Modern Portfolio theory which is a thing [Modern Portfolio Theory book appears]

00:44

apparently that signifies that this fund manager or mutual fund is pretty awesome

00:49

and we can quantify that awesomeness with a number which we call alpha well

00:54

what does this number mean? well a 2 indicates that the fund or investment

00:58

performed at 2 percent better than the benchmark index and minus 7 is a 7 percent

01:03

in the wrong direction and stuff like that and as we all know an alpha dog [Dog chewing a bone]

01:06

will eat numbers like that for breakfast so high alpha good low alpha bad

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