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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: marc ultra who wrote (1113)9/19/1998 9:41:00 PM
From: Investor2  Read Replies (2) of 15132
 
That's an interesting point. It reminds me of a question that has been in the back of my mind for some time:

Has the huge multi-year bull run that we've had during the 1990's invalidated the use of the beta coefficient? Let me rephrase that a little. During a period in which the market is always going up, is a beta less than 1.0 simply a sign of underperformance, rather than a sign of less risk?

The fund that you mention has underperformed the market, but it has a low beta. Maybe the low beta was not a sign that the fund is less volatile (i.e., rises and drops less) than the market. Maybe the fund rises less than the market in bull runs and falls more than the market in corrections.

Any thoughts?

Best wishes,

I2
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