The Capital Asset Pricing Model asserts that expected returns are linearly related to a single systematic source of risk, i.e. the risk of the market portfolio. In this model, beta is a relative measure of market portfolio risk. An alternative model, the APT model, claims that expected returns are linearly related to a variety of systemic factors, k of them, and that means that there are numerous betas. Specifically, E[R] = rf + ß1f1 + ß2f2 + ß3f3 + ß4f4 … +ßkfk where ßk is the risk exposure of the kth factor and fk is the factor risk premium for the kth factor. If k were equal to one, the APT model would be the same as the CAPM. The APT model gives investors a bit more opportunity when constructing a portfolio. If investors can identify the factors that drive investment returns, they will have much better estimates of the true expected asset returns and the covariance matrix, allowing for superior returns. Question: To what extent does the CAPM model coincide with, or collide with, a stock-picking investment strategy (such as Warren Buffet’s). To what extent does the APT model coincide with, or collide with, a stock-picking investment strategy?