CAPM also makes use of what is called a "definitional identity." This is something that is automatically true, simply because of the way things have been defined.

The cheaper the stock, the better the outlook for future returns.

So you see, in the end, it is nearly certain that the power of prediction must triumph over the arrogance of elegance.

A comprehensive list of factors brings predictive stability and predictive stability and predictive power.

In real-world Finance, they don't pay for elegance. They pay for power - predictive power.

Less volatile stocks tend to have negative abnormal profits; more volatile stocks tend to have positive abnormal profits.

CAPM also makes use of what is called a "definitional identity." This is something that is automatically true, simply because of the way things have been defined.