Security Selection Process
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Managing the trade-off between risk and reward is the hallmark of the research effort at Godsey & Gibb Associates--Investment Counsel. In our analysis, we often refer to legendary investor Benjamin Graham who wrote:
Investment management is about the management of risks,
not the management of returns.
With information, analysis and recommendations provided by our Director of Research, the investment management process at Godsey & Gibb is a collaborative, team effort, driven by the firm’s Investment Committee. Its members have an average of 24 years of professional investment management experience. During this time our firm has witnessed a variety of market environments and successfully served clients with widely differing needs and objectives.
Please click here for additional comments from Dan Powell, CFA, Director of Research at Godsey & Gibb Associates.
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Alpha is a risk-adjusted measure of the so-called "excess return" on an investment. It is a common measure of assessing active manager's performance.
The formula for Alpha is expressed as follows:
Alpha is a risk adjusted performance measure that is the average return on a portfolio over and above that predicted by the CAPM (Capital Asset Pricing Model), given the portfolio's beta, or volatility, and the average market return.
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