Roger's 1998 Short Picks Message Board

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Strategies & Market Trends : Roger's 1998 Short Picks

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To: Pancho Villa who wrote (4780)	3/11/1998 6:59:00 PM
From: hasbeen101	Read Replies (1) of 18691

This is the famous CAPM that got Fisher/Black (? need to check my PhD is not in Finance, probably an advantage and not a handicap!) a Nobel price. So buying CCI at around 130+ is not the same as buying AOL. AOL is a heck of a lot more risky/volatile. This has to do with the famous Beta which many now say is a piece of junk! Willaim F. Sharpe, now a professor at Stanford, won the Nobel priize for inventing CAPM. He has a homepage at: www-sharpe.stanford.edu and ayone who is serious about investing would be nuts not to take the opportunity to read this Nobel prize winner's thoughts on investing (for free!) BTW, while beta doesn't seem to work at predicting long-run returns, Burton Malkiel (author of "A Random Walk down Wall Street") published a good paper in the Journal of Portfolio Management showing that beta was a really good predictor of how far stocks would tank in the 87 crash. Anyone who thinks the US market is going to tank (I don't) could be guided by this evidence in forming their short portfolio.

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