2012 Biotech Charity Contest Message Board

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Biotech / Medical : 2012 Biotech Charity Contest

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To: BulbaMan who wrote (370)	10/13/2012 7:26:49 PM
From: IRWIN JAMES FRANKEL	Read Replies (1) of 513

Some times it is good to back up and remember how the numbers are calculated. :-) So while iShares says the Beta of the NBI is 0.48 to the S&P 500 (but does not give the time frame used in the calculation), the Beta this year so far is 2.32. (S&P up 15.56% and NBI up 36.15%). Thus, beta will vary significantly by the time frame selected. And if we are just looking at YTD, then each portfolio return compared to the whatever market comparator (S&P or NBI) return, is the beta for YTD. So unless we wanted to somehow adjust performance to the beta of the relatively smaller caps* that we tend to select in the contest (that was the theory behind my comment), then the exercise seems now to be misguided. I say misguided not because I do not think smaller cap stock carry higher betas (I do), but because I am skeptical of the value of using the low cap stocks we collectively select as the benchmark. It is pretty clear to me that I am not in the same rank as any of the top 10 even if some of the other pickers are. So even if I took the time to do the calculations, I am not sure it adds much to the collective. :-) ij * My thinking is that smaller cap stock tend to be more volatile.

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