What are really good returns?
Do you agree that alpha is just undiscovered beta?
It can be but not always. Alpha can be from a one off idiosyncratic event which wouldn’t really be a beta that you could consistently extract from.
However, to your point, trend following used to be alpha but it’s not really anymore.
The reason you have 'alpha' is because markets are not efficient pricing mechanisms. This 'undiscovered' beta is like the error term in my opinion.
Yeah again it all comes back to definitions. The terms are tools in my mind as opposed an objective standard.
Do you agree that alpha is just undiscovered beta?
It can be but not always. Alpha can be from a one off idiosyncratic event which wouldn’t really be a beta that you could consistently extract from.
However, to your point, trend following used to be alpha but it’s not really anymore.
The reason you have 'alpha' is because markets are not efficient pricing mechanisms. This 'undiscovered' beta is like the error term in my opinion.
Yeah again it all comes back to definitions. The terms are tools in my mind as opposed an objective standard.