Seeking Gamma

Posted by

Lost in the shuffle last week was this fascinating discussion at Morningstar about a new way to judge and evaluate the relative success of one’s retirement portfolio – not through the traditional lens of alpha and beta…

From Morningstar:

The benefits from “good” financial-planning decisions are difficult to quantify. For any given portfolio, investment decisions generally can be decomposed into two primary components: beta and alpha. Beta can be defined as the systematic risk exposures of the portfolio (usually achieved through asset allocation), and alpha is the residual (skill or luck-based) component associated with the various flavors of active management, such as tactical asset allocation, security selection, and more. Alpha and beta are at the heart of traditional performance analysis; however, their impact on a successful retirement can be far less important than other financial- planning decisions.

In this article, we introduce a concept called “Gamma,” which is designed to measure the additional expected retirement income achieved by an individual investor making intelligent financial-planning decisions. Gamma is the third letter in the Greek alphabet (preceded by alpha and beta), and within financial economics, it is sometimes used as the variable denoting an investor’s degree of risk aversion. Given that Gamma is relatively unclaimed within financial literature, we seek to give it new meaning.

Keep Reading:

Alpha, Beta, and Now … Gamma (Morningstar)

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Andrew Wright Attorney Maine commented on Feb 03

    Andrew Wright Attorney Maine

    […]check below, are some absolutely unrelated internet sites to ours, nonetheless, they’re most trustworthy sources that we use[…]

  2. وی پی ان ایفون commented on Feb 03

    رفع ارور 1009

    Hey! I know this is considerably off topic but I was asking yourself if you realized exactly where I could get a captcha plugin for my remark type? I’m making use of the very same weblog platform as yours and I’m obtaining issues discovering 1? Thanks…

  3. Belize city inn commented on Feb 04

    Belize city inn

    […]Sites of interest we’ve a link to[…]

  4. 脱毛 commented on Feb 04

    脱毛

    […]below you will discover the link to some web pages that we believe you should visit[…]

  5. SEO Mauritius commented on Feb 04

    SEO Mauritius

    […]Here are a number of the internet sites we advocate for our visitors[…]

  6. vpn commented on Feb 04

    رفع ارور 1009

    Examine under, are some fully unrelated internet-internet sites to ours, even so, they are most reliable resources that we use.

  7. گوگل adwords commented on Feb 04

    تبلیغات در صفحه اول گوگل

    Appreciating the time and work you set into your site and comprehensive information you offer you. It is great to arrive across a site each after in a although that is not the identical undesirable rehashed info. Great study! I’ve saved your website an…

  8. کولر 13000 commented on Feb 05

    خرید کولر صنعتی

    I do not know if it’s just me or if maybe every person else encountering problems with your website. It appears as if some of the created textual content within your posts are working off the display screen. Can somebody else you should remark and enab…

  9. گوگل adwords commented on Feb 05

    تبلیغات در صفحه اول گوگل

    Hi there! Do you know if they make any plugins to support with Research Motor Optimization? I’m attempting to get my blog to rank for some focused keywords but I’m not observing really excellent results. If you know of any please share. Appreciate it!

  10. خرید کولر صنعتی commented on Feb 06

    خرید کولر صنعتی

    the time to study or consider a seem at the articles or web-web sites we have connected to underneath the

  11. رفع ارور 1009 commented on Feb 06

    رفع ارور 1009

    Correct now it seems like Movable Type is the top blogging system out there right now. (from what I have study) Is that what you are making use of on your website?

  12. گوگل adwords commented on Feb 06

    تبلیغات در صفحه اول گوگل

    Thanks again for the blog post.Really thank you! Great.

  13. خرید vpn برای آیفون 6 commented on Feb 06

    وی پی ن آیفون

    I know this if off subject but I’m searching into starting up my personal weblog and was curious what all is required to get set up? I’m assuming possessing a website like yours would price a pretty penny? I’m not very internet savvy so I’m not one hun…

  14. دانلود hotspot shield برای ویندوز کرک شده commented on Feb 07

    رفع ارور 1009

    Do you have a spam dilemma on this site I also am a blogger, and I was seeking to know your situation we have produced some good methods and we are looking to swap approaches with other folks, be certain to shoot me an e mail if intrigued.

  15. تبلیغ گوگل commented on Feb 07

    تبلیغ در گوگل ادوردز

    Great website! I found it although surfing about on Yahoo News. Do you have any recommendations on how to get detailed in Yahoo News? I have been attempting for a even though but I in no way seem to get there! Cheers

HowIInvestMyMoney