WSJ: What Is 'Alpha' in Investing?

By SIMON CONSTABLE

When you pick portfolio managers, you need to know how good they are at their job—or put another way, how much alpha they add.

If you could have done just as well buying an index-tracking investment—such as the SPDR S&P 500 exchange-traded fund for broad U.S.-stock exposure—your portfolio manager isn't adding any alpha. If the manager does better than just tracking the market benchmark, then he or she is adding alpha.Alpha, the first letter of the Greek alphabet, in this context means the positive difference someone makes in the investment process, says Art Hogan, chief investment strategist at Lazard Capital Markets in Boston. An investment manager who adds a lot of alpha is "a good stock picker or sector picker," he says.

Alpha only goes so far, though. "When you add alpha it's a relative term," says Mr. Hogan. For instance, if you owned gold stocks and the gold sector plummeted like it did recently, your alpha might be that you lost less money than other investors.

Also, don't confuse alpha with beta, another term taken from the Greek alphabet. In this conversation, beta refers to how stocks move relative to the overall market. A stock with a beta of 1 moves in sync with the market.

See original story here.

WSJ: Holiday Gifts for the Money-Minded

By SIMON CONSTABLE
If there's one time of year when people are apt to break the budget, it's Christmas.

Here are some gifts that at least stand a chance of nurturing the money-savvy gene. What's more, we have a gift idea for pocketbooks of all sizes.
1. One Antarctic Dollar ($1)
Giving cash is an old standby, but often not special. So what about beautiful currency from far-flung lands? See original story here.

Photo by Derek Oyen on Unsplash

Sales of WSJ Guide Continue to Soar...

By SIMON CONSTABLE

Sales of the WSJ Guide to the 50 Economic Indicators that Really Matter have now surpassed 70,000 worldwide including editions in Japanese, Korean and Chinese as well as the original English.

WSJ: Mandela Obituary

By SIMON CONSTABLE

Nelson Mandela

South Africa The Good News / www.sagoodnews.co.za, 

CC BY 2.0, via Wikimedia Commons

WSJ: Year-End Distributions Hold Dangers for Fund Investors

By SIMON CONSTABLE

Congratulations, you've made it through another year! Well, almost. For mutual-fund investors, there is at least one more thing that could trip you up: ignoring the so-called date of record for the capital-gains distributions that many funds pay near year-end. Failure to pay attention may mean you get taxed for profits you didn't actually participate in.

With stocks, you decide when to take your capital gain or loss when you sell. But funds must distribute substantially all of the net realized gains in their portfolios to investors each year, explains Brian Peer, co-portfolio manager at Novato, Calif.-based Hennessy Funds. See original story here.

WSJ: Why Flexible-Rate Mortgages Make Sense

By SIMON CONSTABLE

If you're buying a home anytime soon, here's some contrarian advice: Don't take out a fixed-rate mortgage. If you do, you're likely to pay more than you need to.

Instead, it often makes more sense to choose a floating-rate note, also known as an adjustable-rate mortgage. Even on a small mortgage, over time you'll save thousands of dollars. If you use the extra cash to pay down the loan, you'll save even more. See original story here.

Photo by Dillon Kydd on Unsplash

WSJ: 'Presidential Stock Cycle' Sees Weak 2014

By SIMON CONSTABLE

Tomorrow, as you cast a vote, you might also gird yourself for rocky markets ahead, especially during the first nine months of 2014.

How so? The second year of a presidential term is traditionally a period of subpar stock performance.

Specifically, since 1945, the second year of a president's term saw the S&P 500 gain 5.3% in price on average, versus 16.1% in the third, according to an analysis by S&P Capital IQ. No distinction is made between a president's first or second term. The clock simply starts over.The "presidential stock market cycle" says that stocks perform better or worse depending on the year of the president's term. The second year is the worst, and the third is the best, on average. See original story here.