Week 41 Day 4: Alpha: The Holy Grail Nobody Can Find

Alpha is the return above what your risk level predicts. If your portfolio's beta and Sharpe ratio predict a 9% return and you earn 11%, the extra 2% is alpha -- genuine skill. After fees, 92% of fund...

Alpha is the return above what your risk level predicts. If your portfolio's beta and Sharpe ratio predict a 9% return and you earn 11%, the extra 2% is alpha -- genuine skill. After fees, 92% of fund managers fail to produce positive alpha over 15 years. Alpha is real but extraordinarily rare.