Over 700 finance terms, Shmooped to perfection.
Wall Street loves to assign Greek letters to things to make them sound almost mythological. "Alpha" is no different. Alpha is all about how well your portfolio manager is picking stocks relative to his index slice of the market, risk adjusted. That is, if your manager was up 30% in a year when the market was up 10%, that's great - but how did he get there? Was it speculating in options on high flyer internet stocks? Or did he just get the fundamentals right on Dow Chemical? High Alpha good; Low Alpha bad. Cold Alpo: A brand of dog food.