RA - Seeking Beta: The More Dependable Way To Achieve 'Alpha'

• Seeking "Alpha" means trying to do better than average (i.e. better than "Beta"); a worthy objective that, not surprisingly, less than half of all investors actually achieve.
• The more aggressively an investor attempts to achieve Alpha, the more they usually end up holding lower-yielding growth stocks dependent on market appreciation for most of their total return.
• But being at the mercy of markets for their total return drives many growth investors to balance/hedge their portfolios against downturns by buying low-return but more "stable" assets.
• The Catch 22: the opportunity cost of balancing and hedging can drag down returns so investors who start out seeking "Alpha" end up "settling for Beta" (or often even less).
• Unless investors are among the small minority who have a sure-fire way to pick winners and be consistently right, they are better off "seeking Beta"

For further details see: