Who thought of Beta for stocks?

Start with Investopedia and Wiki to define financial terms.

How does beta measure a stock's market risk?

Read more: http://www.investopedia.com/ask/answers/042415/how...

http://en.wikipedia.org/wiki/Beta_%28finance%29

Edit:

Myron Scholes and Joseph Williams (1977) provided a model for estimating betas from nonsynchronous data. These guys are absolute genius, and ran Longterm Capital Management, the one that almost broke the entire financial system in the Nineties before being bailed out by the fed.

Pure academia at its best. Beta is just theory. Thinking that one number can supply data for volatility in any situation is just pointless, but it's a starting point if you want to write a paper and get published and obtain your PhD. It's right up there with the Random Walk theory and CAPM modeling. Pointless to most mere humans. Worse, even after you get done curve fitting and supplying unknown/unknowable data, it doesn't even work or correlate to the market. It has no real value in measuring risk other than arbitrary comparison.

You have to start with foundational theory, and add theory on top of theory to come up with the idea that risk is a fixed point. Never mind this cannot be proven, but is taken as foundational and true, then built on to derive beta. Or would you try to tell me that risk is the same at the beginning of a bull market as at the end? Beta also assumes that the upside potential and downside risk of any investment are essentially equal; hogwash.

Fama and French reports that there is essentially no correlation between beta and average returns for 1941–1990. Where is the positive correlation between beta and return (that is, more risk = greater return)?

Different websites calculate beta differently using different time frames, so you never know which one to use, if you can use it at all. Nobody can agree on which one to use.

Why such interest in pointless and useless theory? Why study Evolution if it has no basis or beginning nor is even a good premise?

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