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[[Alpha]], ''[[α]]'', is one of the {{tag|Greeks}} - the ''first'' of the {{tag|Greeks}} - a {{tag|buzzword}} beloved of unimaginative derivative salespeople and second-rate {{tag|hedge fund}} managers and hence was much abused in the run up to the great financial crash of 2008. Like many financial buzzwords, it is derived from a technical term in portfolio management theory which does mean something, though through long misuse the original, helpful meaning has mostly fallen out of use. | [[Alpha]], ''[[α]]'', is one of the {{tag|Greeks}} - the ''first'' of the {{tag|Greeks}} - a {{tag|buzzword}} beloved of unimaginative derivative salespeople and second-rate {{tag|hedge fund}} managers and hence was much abused in the run up to the great financial crash of 2008. Like many financial buzzwords, it is derived from a technical term in portfolio management theory which does mean something, though through long misuse the original, helpful meaning has mostly fallen out of use. | ||
In a technical sense, [[alpha]] is a measure of market outperformance: it gauges the variance of a portfolio’s performance over the market average, or | In a technical sense, [[alpha]] is a measure of market outperformance: it gauges the variance of a portfolio’s performance over the market average, or “[[beta]]”. An investment manager’s [[alpha]], therefore, is the value that manager adds that you would miss out on if you just invested in the [[benchmark]]. | ||
But when you’re a salesperson, it’s easier than that. [[Alpha]] is just a catch-all {{tag|buzzword}} meaning “really cool”, which is why it’s so popular in new product acronyms: you know, ''Tactically [[Enhanced]] [[Alpha]] Receipts'', or ''[[TEARs]]'', which you can be assured you’ll eventually be in if you fall for a ruse as | But when you’re a [[salesperson]], it’s easier than that. [[Alpha]] is just a catch-all {{tag|buzzword}} meaning “really cool”, which is why it’s so popular in new product acronyms: you know, ''Tactically [[Enhanced]] [[Alpha]] Receipts'', or ''[[TEARs]]'', which you can be assured you’ll eventually be in if you fall for a ruse as poor as that. Also, it’s a vowel, and you need vowels to make good acronyms. | ||
===The love-hate relationship between [[Alpha]] and [[Vega]]=== | ===The love-hate relationship between [[Alpha]] and [[Vega]]=== | ||