Comments on: Sectors – Know which crowd your stock is hanging out with http://www.tasgall.com/2006/08/28/sectors-know-which-crowd-your-stock-is-hanging-out-with/ Peering into the Cauldron of the Gods... Wed, 28 Sep 2011 10:20:57 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Jason G. http://www.tasgall.com/2006/08/28/sectors-know-which-crowd-your-stock-is-hanging-out-with/comment-page-1/#comment-174 Jason G. Thu, 31 Aug 2006 05:35:16 +0000 http://www.tasgall.com/2006/08/28/sectors-know-which-crowd-your-stock-is-hanging-out-with/#comment-174 My understanding of the term 'alpha' in the investment community at large is that it is the performance gain (or loss) from a manager's presence. When people talk about "seeking alpha" they're talking about finding good managers for their investments. As such, it might make sense to apply Quicksilver's formula to an individual security, but only if you want to replace an entire asset class (or benchmark) with that security. E.g., replacing all domestic equity with MSFT. But then again, is that MSFT's alpha, or is it <i>your alpha</i> for choosing MSFT over, say, INTC? My understanding of the term ‘alpha’ in the investment community at large is that it is the performance gain (or loss) from a manager’s presence. When people talk about “seeking alpha” they’re talking about finding good managers for their investments.

As such, it might make sense to apply Quicksilver’s formula to an individual security, but only if you want to replace an entire asset class (or benchmark) with that security. E.g., replacing all domestic equity with MSFT. But then again, is that MSFT’s alpha, or is it your alpha for choosing MSFT over, say, INTC?

]]> By: Quicksilver http://www.tasgall.com/2006/08/28/sectors-know-which-crowd-your-stock-is-hanging-out-with/comment-page-1/#comment-171 Quicksilver Mon, 28 Aug 2006 19:57:01 +0000 http://www.tasgall.com/2006/08/28/sectors-know-which-crowd-your-stock-is-hanging-out-with/#comment-171 Please note that the "Weighted Alpha" mentioned on Barchart is not the same alpha dicussed in my other post. I think this is misleading. Looking up the definition on the site it reads "measure of how much a stock has changed in the one-year period...weight[ed] to recent activity." This isn't alpha. It's simply weighted return. What would actually be useful is real alpha. I'm working now on putting together some stats (including real alpha and relative strength) on the Select Sector SPDRs that might get us started on a good approach to sector portfolios. Please note that the “Weighted Alpha” mentioned on Barchart is not the same alpha dicussed in my other post. I think this is misleading. Looking up the definition on the site it reads “measure of how much a stock has changed in the one-year period…weight[ed] to recent activity.” This isn’t alpha. It’s simply weighted return. What would actually be useful is real alpha. I’m working now on putting together some stats (including real alpha and relative strength) on the Select Sector SPDRs that might get us started on a good approach to sector portfolios.

]]> By: Quicksilver http://www.tasgall.com/2006/08/28/sectors-know-which-crowd-your-stock-is-hanging-out-with/comment-page-1/#comment-170 Quicksilver Mon, 28 Aug 2006 18:17:24 +0000 http://www.tasgall.com/2006/08/28/sectors-know-which-crowd-your-stock-is-hanging-out-with/#comment-170 Barchart is great. I've been a long, long time member of their advanced commodities section. I've never been to the sector area but I like it. I'll have to play with it more and get back to you on your question. Barchart is great. I’ve been a long, long time member of their advanced commodities section. I’ve never been to the sector area but I like it. I’ll have to play with it more and get back to you on your question.

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