The eternal chase for alpha

Founder and Chief Investment Officer of Montgomery Investment Management
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Key points

  • For corporate earnings to grow, the companies you invest in need to make good on their expansion plans.
  • It helps to be fully invested. A portfolio with a large chunk allocated to cash is rarely going to outperform the index.
  • Finding alpha needs access to a wide universe of stocks, and some detailed research


We all know alpha, that elusive figure of outperformance that sustains the industry of investment management (of which yours truly is a part of). We all wish to own portfolios with positive alpha, such that our wealth will grow to new heights on the back of long-term compounding returns. However, alpha is notoriously difficult to acquire and with some slight of thought it’s quite easy to answer the question of why this is so.

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