What is alpha investing?

Alpha investing is a type of investment strategy that aims to generate returns greater than the market's average returns by selecting individual investments that possess certain exceptional qualities. The strategy involves identifying securities that are undervalued or overlooked by the market and may include stocks, bonds, or other securities.

Alpha investing is based on the concept of alpha, which measures an investment's excess return compared to a benchmark, such as the S&P 500. The idea is to generate returns that cannot be explained by the market's overall performance.

The primary focus of alpha investing is on stock selection. Alpha investors seek out companies with high growth potential, low valuations, and strong financial performance. They use fundamental analysis and other analytical tools to identify these opportunities.

Alpha investors also tend to have a long-term investment horizon, sometimes holding onto their positions for years. They believe that time in the market beats timing the market, and that the best way to generate alpha is by taking a patient, disciplined approach to investing.

Overall, alpha investing is a rigorous and thorough approach to investing that requires a deep understanding of the market and an ability to identify and seize opportunities as they arise.