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It is the typical meaningless "conventional wisdom" that is commonly used on Wall Street to prove any point you want to prove.
The return of a stock is given by:
Ret_Stock = alpha + beta * Ret_Index + other factors and noise
The other factors include effect specific to an industry.
Every stock has a different values of alpha and beta and these change some over time.
Bob Fulks
At 01:21 PM 5/22/2006, you wrote:
>In a message dated 5/21/2006 3:40:50 P.M. Eastern Standard Time, nwinski@xxxxxxxxxxxxx writes:
>
>Here is something that every stock picker needs to know.
>
> 50% of all individual stock price behavior is attributable to the general market trend.
>
> Another 35% of individual stock price behavior is attributable to its industry or sector.
>
> That only leaves a 15% probability that all of your hard work picking individual stocks will translate to anything.
>
>I seen those numbers mentioned over the years. Can anyone quote a study or 'proof' of this statement. Where do these numbers come from and how accurate are they?
>
>Howard Bernstein
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