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Finance: What is a High Alpha Investor? 5 Views

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What is a High Alpha Investor? A high alpha investor invests in securities with alpha values of 1 or higher. This means that the mutual fund or stock has outperformed its benchmark index by 1% or more.

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Transcript

00:00
Finance a la shmoop what is a high alpha investor? alpha dogs you know um fear em, [Arrow points to dogs]
00:10
love em feed em alpha is good okay okay more specifically it's an
00:15
investing term synonymous with smart if you have lots of alpha then you are
00:20
smarter than the market so a high alpha investor is someone who beats the market
00:25
while taking low risk ie not a lot of leverage not super volatile

00:31
stocks per se or crazy categories like crypto currencies and they didn't just
00:35
go by 20 bucks of California lottery tickets and then win alpha is well
00:40
kind of a newish term in Modern Portfolio theory which is a thing [Modern Portfolio Theory book appears]
00:44
apparently that signifies that this fund manager or mutual fund is pretty awesome
00:49
and we can quantify that awesomeness with a number which we call alpha well
00:54
what does this number mean? well a 2 indicates that the fund or investment
00:58
performed at 2 percent better than the benchmark index and minus 7 is a 7 percent
01:03
in the wrong direction and stuff like that and as we all know an alpha dog [Dog chewing a bone]
01:06
will eat numbers like that for breakfast so high alpha good low alpha bad
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