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a) What's alpha? b) There are some things where relative accomplishments are OK, like sports. Saying you're an Olympic gold medalist means you're just better t

• Alex3917 20y ago
  Each portfolio has an expected return based on risk. The higher the risk, the higher the return has to be to justify the risk. Alpha is the difference between the expected return based on the risk of the portfolio and the actual return. So positive alpha is good, negative alpha is bad. Traders are compensated based on their alpha. My point about the relative accomplishment thing is just that you can go through your entire life trying to beat other people at stuff, but just because you can beat someone at something doesn't mean you're making the world a better place. Being an Olympic athlete is certainly an accomplishment, although hopefully one goes on to do stuff that benefits others. And I say that as someone who pulled a 500 meter piece on the rowing machine that was faster than ltwt Olympic standard this afternoon.