Tuesday, March 11, 2014

Seeking Alpha, Beta And The Economic Cycle

  • The market has run up. And as can be expected some high beta names have performed quite well while low beta names have underperformed.
  • Several of the high beta names are priced to deliver negative alpha. The negative alpha will offset beta driven gains going ahead.
  • On the other hand, several low beta names are priced to deliver alpha. The lower than market returns associated with low beta will be offset by high alpha going ahead.
  • This review which seeks out sector alpha is limited to the Dow simply to reduce the size of the universe of stocks.