Friday, July 15, 2005

According to Bloomberg Financial Definition, alpha is the premium an investment portfolio earns above a certainbenchmark (such as the Standard & Poor's 500). A positive alpha indicates that the investor earned a premium over that index. In terms of stocks; a positive alpha is viewed as a stock beingundervalued in relation to other stocks with similar systematicrisk. In terms of portfolios; a description of the extraordinary reward obtained from the portfolio. The better the management of the portfolio, the more positive the alpha.

Ok, the model portfolio is called XdP (Extreme Dog Portfolio), no, it is not my personal portfolio, but it does includes the fixed income and equity trades that I wish I could do.