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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Pancho Villa who wrote (4780)	3/11/1998 6:59:00 PM
From: hasbeen101	Read Replies (1) \| Respond to 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.

To: Pancho Villa who wrote (4780)	3/11/1998 11:19:00 PM
From: CatLady	Read Replies (1) \| Respond to of 18691

Hi Pancho, Some how I don't think Peter Lynch would be buying BFIT these days. On the other hand, if Beta and volatility supposedly quantify the risk in holding stocks, I can see how the MF managers end up with stocks like AVNT and BFIT in their portfolios. I guess that's where diversification comes in, just diversify out the chance that you picked a real clunker, don't bother doing the in-depth analysis that might find the problems ahead of time. I don't get it, guess that's why I dropped out of MBA program and decided to say on the technical side of the fence. CL