Comment Re: WTF is alpha (Score 1) 35
Itâ(TM)s a measure of profitability relative to other similar investment options over a period of time.
Grossly oversimplified example: if the overall market is returning, letâ(TM)s say, 4% year over year, and a specific investment (stock, bond, whatever) is returning 5% for that same year, the alpha on that investment is 1%; itâ(TM)s the gain youâ(TM)d realize above and beyond just putting your money in the overall market.
Alpha is a big big deal to pro investors; finding large alpha opportunities makes you considerably more attractive to money looking for investment opportunities.