Talent vs. Skills
What's RadMatter going to do? "Help people develop and demonstrate talent."
RadMatter doesn't want to tackle the education function of college so much as (arguably) its biggest function: signaling. Signaling means that what employers are interested in isn't what you learned at Yale, but that you were smart enough to get into Yale.
On RadMatter, people will be able to "categorize their experiences based on talents, not skills," Stephens tells us. Talents are broader than skills. So for example, Stephens says, both "I know [the programming language] Python" and "I organized a wedding for a thousand people", which are skills, can fit into the talent "solving puzzles." Examples of other talents could be "seeing possibilities" or "empowering people."
So anyone will be able to create a profile with what they've done and have it socially validated by the community. As on Couchsurfing.com, where only people who have certain badges can award it to others, "people can only endorse others if they have that same talent."
There will be many problems to figure out. "Talents" are a vague thing, and certification can pose problems. It's easy enough to prove you know Python, but how do you prove on a website that you organized a wedding? "You have to articulate it in a way that's convincing" to get it validated, Stephens says, and anyway plenty of people lie on their resume and no system is perfect. Which is fair enough, but we see devils in those details.
Read more: http://www.businessinsider.com/dale-j-stephens-uncollege-radmatter-thiel-fellows-2011-6#ixzz1jCfHkOAL
1. The measure of the performance of a portfolio after adjusting for risk. Alpha is calculated by comparing the volatility of the portfolio and comparing it to some benchmark. The alpha is the excess return of the portfolio over the benchmark
Alpha measures risk-adjusted return, or the actual return an equity security provides in relation to the return you would expect based on its beta. Beta measures the security's volatility in relation to its benchmark index.
If a security's actual return is higher than its beta, the security has a positive alpha, and if the return is lower it has a negative alpha.
For example, if a stock's beta is 1.5, and its benchmark gained 2%, it would be expected to gain 3% (2% x 1.5 = 0.03, or 3%). If the stock gained 4%, it would have a positive alpha.
Alpha is derived from a in the formula Ri = a + bRm which measures the return on a security
- (Ri) for a given return on the market (Rm)
- where b is beta
a = Ri - bRm
Alpha also refers to an analyst's estimate of a stock's potential to gain value based on the rate at which the company's earnings are growing and other fundamental indicators.
For example, if a stock is assigned an alpha of 1.15, the analyst expects a 15% price increase in a year when stock prices are generally flat. One investment strategy is to look for securities with positive alphas, which indicates they may be undervalued.
If a security's actual return is higher than its beta, the security has a positive alpha, and if the return is lower it has a negative alpha.
For example, if a stock's beta is 1.5, and its benchmark gained 2%, it would be expected to gain 3% (2% x 1.5 = 0.03, or 3%). If the stock gained 4%, it would have a positive alpha.
Alpha is derived from a in the formula Ri = a + bRm which measures the return on a security
- (Ri) for a given return on the market (Rm)
- where b is beta
a = Ri - bRm
Alpha also refers to an analyst's estimate of a stock's potential to gain value based on the rate at which the company's earnings are growing and other fundamental indicators.
For example, if a stock is assigned an alpha of 1.15, the analyst expects a 15% price increase in a year when stock prices are generally flat. One investment strategy is to look for securities with positive alphas, which indicates they may be undervalued.
The measure of an asset's risk in relation to the market (for example, the S&P500) or to an alternative benchmark or factors. Roughly speaking, a security with a beta of 1.5, will have move, on average, 1.5 times the market return. [More precisely, that stock's excess return (over and above a short-term money market rate) is expected to move 1.5 times the market excess return).] According to asset pricing theory, beta represents the type of risk, systematic risk, that cannot be diversified away. When using beta, there are a number of issues that you need to be aware of:
(1) betas may change through time;
(2) betas may be different depending on the direction of the market (i.e. betas may be greater for down moves in the market rather than up moves);
(3) the estimated beta will be biased if the security does not frequently trade;
(4) the beta is not necessarily a complete measure of risk (you may need multiple betas). Also, note that the beta is a measure of co-movement, not volatility. It is possible for a security to have a zero beta and higher volatility than the market.
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