Alpha, the net performance of a component against the benchmark is an overlooked tool
Absolutely speaking, any bounce back now on markets should be the last for the year. We offcourse can be wrong and prefer to be judged on alpha (relative performance) as relative accountability is fine with us. According to Alpha India, the top outperformers in the weeks ahead should be Reliance Communications, Reliance Infrastructure, SBI, HDFC, ONGC, Larsen, Jaiprakash Associates, Maruti, Bharti and DLF. On the short side (reduce side), we have Ranbaxy, ACC, Sail, Tata Steel, Wipro, Tata Motors, Sun Pharma, TCS, M&M and Infosys.
Performance like everything follows the 80-20 rule, 80 per cent of your gains are going to come from 20 per cent of your portfolio. So why not give it a thought?
The importance of alpha
If alpha was so important, then why don't newspapers and websites publish it? Why alpha gets featured annually but not as intraday or daily event? Why don't we carry alpha trackers every day along with the top movers, top losers and top volume picks? What stops us from doing it? Even as a derivative trader, don't you need to know which one of your futures will deliver more returns than the other? Which short will make more money, Tata Motors or Maruti? Which long will make more money TCS or Infosys?
Outdoing markets
Now the trader may say, "Who knows?" Nobody knows what is going to happen, then why do we claim to get excited about gains early part of the year, unaware of what lies ahead in the year. The good thing about being in performers whether on the long or the short side is that we burn less and we deliver more. Orpheus is in no way trying to dissuade you from doing what you are already doing profitably and consistently, what we are telling you is about confluence, combining ideas. Shorting something that gives 10 per cent more than the Nifty is worth the effort.
