Leveraged alpha: Difference between revisions

Leveraged alpha (view source)

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 Snake Oil, basically.
-Leveraging [[alpha]] is technically possible, but in practice --- yeah.
+[[Leverage|Leveraging]] [[alpha]] is technically possible, but in practice --- yeah.
-What most {{tag|hedge fund}} manager claim to be [[leveraged alpha]] is, usually, really plain old [[vega]] - that is, just [[leverage]]. If your market benchmark is beating the borrowing rate, you will make money by borrowing.
+What most {{tag|hedge fund}} manager claim to be [[leveraged alpha]] is, usually, really plain old [[vega]] - that is, just [[leverage]]. If your market benchmark is beating the risk-free borrowing rate, you ''will'' make money by borrowing. But if it ain’t...
-If someone pitches "[[leveraged alpha]]" product to you, they are most likely a charlatan - which you would expect, it being the financial markets and all - and a mediocre manager. Especially if they use [[backtesting]] to demonstrate their historical [[alpha]].
+A fellow who pitches a "[[leveraged alpha]]" product to you is most likely a charlatan — you would expect that, it being the financial markets and all — and a mediocre [[fund manager]]. Especially if you see [[backtesting]] to demonstrate ''historical'' [[alpha]].
 {{c|Greeks}}