PT  - JOURNAL ARTICLE
AU  - Laurence B Siegel
AU  - M. Barton Waring
AU  - Matthew H Scanlan
TI  - Five Principles to Hold Onto (Even When Your Boss Says the Opposite)
AID  - 10.3905/JPM.2009.35.2.025
DP  - 2009 Jan 31
TA  - The Journal of Portfolio Management
PG  - 25--41
VI  - 35
IP  - 2
4099  - https://pm-research.com/content/35/2/25.short
4100  - https://pm-research.com/content/35/2/25.full
AB  - Although finance practitioners almost universally learn in school that the Sharpe market model, which separates all returns into alpha and beta, is the starting point for a number of key investment insights, they often forget, or disregard, this knowledge once they are on the job. The five most important insights that a practitioner should hold dear, regardless of what the boss says, are 1) the importance of making alpha and beta decisions separately; 2) the zero-sum nature of active management; 3) the different criteria needed to make alpha and beta decisions; 4) the great value of alpha successfully delivered; and 5) the desirability of paying appropriate fees for each return component or, in other words, high fees for alpha, low fees for beta.TOPICS: Portfolio theory, in markets, exchange-traded funds and applications