Searching for ALPHA: The Quest for Exceptional Investment Performance [Hardcover]

Ben Warwick (Author)

Book Description

Series: Wiley Investment | Publication Date: May 5, 2000

Can anyone win the investing game? Considering the small number of mutual funds that produce market-beating returns, the task may seem nearly impossible. Even so, there remains an elite group of investment professionals who manage to produce market-beating returns, year after year. What is their edge?

Their edge is defined as alpha-which represents the portion of an investment fund's return that is generated solely by the skills of the portfolio manager. Investors, traders, and speculators alike have searched for a dependable source of alpha for as long as there have been financial markets.

How much of this search is art, and how much is science? The answer to this and other questions can be found within this provocative and highly entertaining book. Some of the topics covered in Searching for Alpha include:
* The three reasons why the mutual fund industry will always underperform the overall stock market
* How to profit from the idiosyncrasies of human behavior
* What the waxing-and-waning tendency of oil wells can tell us about the impact of technology on the investment management industry
* The profit potential of value stocks for the next decade

Editorial Reviews

From the Inside Flap

Can anyone win the investing game? Considering the small number of mutual funds that produce market-beating returns, the task may seem nearly impossible. Even so, there remains an elite group of investment professionals who manage to produce market-beating returns, year after year. What is their edge?

Their edge is defined as alpha-which represents the portion of an investment fund's return that is generated solely by the skills of the portfolio manager. Investors, traders, and speculators alike have searched for a dependable source of alpha for as long as there have been financial markets.

How much of this search is art, and how much is science? The answer to this and other questions can be found within this provocative and highly entertaining book. Some of the topics covered in Searching for Alpha include the following:
* The three reasons why the mutual fund industry will always underperform the overall stock market
* The well-known economist who, by comparing the stock market to a "beauty contest," made a fortune as a speculator
* How a highly successful football betting scheme can be utilized to profitably trade stocks
* How to profit from the idiosyncrasies of human behavior
* What the waxing-and-waning tendency of oil wells can tell us about the impact of technology on the investment management industry
* The commonalities between catching monkeys in India and avoiding taxes on investments in the United States
* The profit potential of value stocks for the next decade

Say goodbye to dry investment theory and hello to a rich and wonderful cast of characters. Who can resist the one-armed mechanic who single-handedly changed the business of U.S. oil production, or the pacifist who pioneered the explosives industry? Where else could you find the likes of Beethoven, Dom Perignon, and the mathematician who stopped Napoleon's advancing army dead in its tracks? Searching for Alpha cleverly combines these colorful figures with cutting-edge financial theories, bringing both to life in a refreshingly educational manner.
www.SearchingForAlpha.com
Jacket Design: Andy Liefer

From the Back Cover

"A provocative, witty, and meaningful book. Searching for Alpha is eminently readable. I highly recommend it!"-Dr. Martin Zweig, Zweig-DiMenna Associates

"Searching for Alpha is right on the mark and essential reading for anyone who wants to go beyond stock-picking and think about how to construct a total portfolio to fit their own risk and return objectives."-Bluford H. Putnam, President, CDC Investment Management Corp.

"Searching for Alpha is as instructional as it is entertaining. Ben Warwick's engaging examination of the modern investment process is succinct yet thorough, and cleverly interspersed with amusing facts, anecdotes, and historical insights . . . a charming book with lots of insight for both the novice and the professional."-Mark Kritzman, Managing Partner, Windham Capital Management, author, Puzzles of Finance

"Searching for Alpha is a wild and entertaining read that just happens to be an investment book. Along the way, you'll read about the Civil War, the origin of professional football, and even whaling-and by the time you're through, you'll know more about the investment game than you ever imagined."-Jeremy Pink, Editor-in-Chief, worldlyinvestor.com

"An erudite, well-written, and interesting book-with the added advantage of being right! The theory is state-of-the-art; the practice is very much current. Warwick has a special talent for historical analogy and storytelling."-Theodore R. Aronson, Partner, Aronson & Partners

See all Editorial Reviews

Product Details

• Hardcover: 224 pages
• Publisher: Wiley; 1 edition (May 5, 2000)
• Language: English
• ISBN-10: 0471348228
• ISBN-13: 978-0471348221
• Product Dimensions: 9.3 x 6.3 x 0.8 inches
• Shipping Weight: 15.2 ounces (View shipping rates and policies)
• Average Customer Review: 4.1 out of 5 stars  See all reviews (14 customer reviews)
• Amazon Best Sellers Rank: #1,476,988 in Books (See Top 100 in Books)

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Customer Reviews

Most Helpful Customer Reviews

14 of 15 people found the following review helpful:

1.0 out of 5 stars Muddled, wandering, uninformed., January 17, 2003

By 

John Sturges (Chappaqua, NY United States) - See all my reviews
(REAL NAME)   

This review is from: Searching for ALPHA: The Quest for Exceptional Investment Performance (Hardcover)

Being in the asset management consulting field I thought this highly recommended title should be as insightful as Swensen's "Pioneering Portfolio Management". I found it directionless, full of unconnected pointless anecdotal comments, as well as giving misleading shallow guidance regarding indexing.

20 of 24 people found the following review helpful:

1.0 out of 5 stars Disorganized, error-prone, unhelpful, August 19, 2000

By A Customer

This review is from: Searching for ALPHA: The Quest for Exceptional Investment Performance (Hardcover)

I suspect that when Ben Warwick sat down to write this book he had no good idea of his intended audience. There are three very different audiences for works on finance. There are ordinary folks, who work for wages or salary, have built up a modest nest, and want some rise-averse suggestions on how to invest it. Then there are people with enough money to get more daring with it, or at least with some portion of their portfolio. This second group, the so-called "sophisticated investors," are the ones who are literally looking for alpha.

Then there is a third group, those whose concern with matters of finance is mostly intellectual. They may want supplemental reading for a college course, or they may be life-long sufferers from curiosity, or even Washingtonian policy wonks.

My point is -- a focused book begins with a decision as to one's audience. Warwick never makes that decision, there are bits and pieces of this book for all three, but a satisfactory whole just isn't here for anybody.

The book is also error prone. Consider the very first graph, on page 5. The caption tells us, "The part of the curve extending from point A and above designates the optimum return for a given amount of risk." But the above graph doesn't contain ANY POINT A! One can figure it out eventually, where point A should be. But the value of a well-drafted graph is that it gives us a sense of certain relationships at a glance. So this sort of mistake -- one example of many, is devastating.

13 of 15 people found the following review helpful:

5.0 out of 5 stars Searching For Alpha, June 5, 2000

By 

George A Hayes (San Diego) - See all my reviews

This review is from: Searching for ALPHA: The Quest for Exceptional Investment Performance (Hardcover)

A terrific read! Searching For Alpha is intelligent, well written and very timely. Author Ben Warwick has a gift for weaving people, anecdotes and financial theory into a fascinating history of the investment business.

I really enjoyed the chapters describing the rise in popularity of mutual funds and indexing. Also, the sections devoted to managed futures and investors' irrational behavior were particularly worthwhile. The book is easy-to-read yet offers important financial insights that are regularly ignored by the mass media.

You won't get rich quick or make a million dollars in real estate with "no money down", but you're bound to become a more savvy and successful investor by reading Warwick's book. Searching For Alpha is simply the best of the myriad of investment books to hits the bookshelves in recent years.