Hell, there are no rules here—we’re trying to accomplish something.
Return = Alpha + Beta + Randomness
Overriding much of today’s discussion of investment strategy is an implicit, and often explicit, belief in the existence of both Alpha and Beta, Alpha being the return skill adds over the strategy style or the market segment’s return (Beta). Alpha and its importance (and identification) are being discovered, or rather rediscovered, after a long period of index focus. The tone over the last few years has been “Alpha is King.” Before that, it was the index mantra of “Buy Beta, there is no Alpha.” ...