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To: MSB who wrote (8)	7/24/1998 3:03:00 AM
From: EL KABONG!!!	of 253

MSB, From Investor's Alliance software, PowerInvestor for Windows, this definition of Beta: Beta A measurement of the volatility of a stock's price versus the overall market. The percent change in the price of a stock with a beta of 1.00 runs about equal to the percent change in the general market. A stock with a beta of less than 1.00 has better price stability than the market. A stock with a beta higher than 1.00 (say 1.60), tends to be more volatile in price than the market. Copyright c 1995-1997 Investors Alliance, Inc. All rights reserved. Now what does this mean in layman's terms? A stock with a Beta of 1.10 is about 10% more volatile than the average stock in the market. This means that highs are about 10% higher and lows are about 10% lower than the average stock in the market. A stock with a Beta of say .80 is 20% less volatile than the average equity in the market. This means it will trade in a tighter range than the average stock. Most investors are comfortable with stocks that have Betas in the .80 to 1.20 range. This range would be considered average by most standards. You asked "Which is better, a higher number or a lower number?". The correct answer is neither. Beta is merely one measurement tool or ratio in the investor's arsenal to be used in evaluating a stock's suitability for our individual portfolios. If you are a conservative investor who cannot abide price volatility in your portfolio, by all means avoid stocks with a high Beta. On the other hand, if you're very risk tolerant, then Beta isn't as meaningful to you. Day traders and short term traders actively seek out stocks with high Betas, because they're looking to make money on the price volatility or price swings. Does this help? KJC

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