Liz Claman
Liz Claman
Liz Claman joined FOX Business Network (FBN) as an anchor in October 2007. Her debut included an exclusive interview with Berkshire Hathaway CEO and legendary investor Warren Buffett.
Before joining FBN, Claman served as an anchor at CNBC, most recently anchoring Morning Call and Cover to Cover. During her time at CNBC, Claman has interviewed major financial newsmakers, including Warren Buffett, Commerce Secretary Carlos Gutierrez, and former Treasury Secretary John Snow. She has also anchored Wake Up Call, Market Watch, and Today's Business. In addition, Claman is the author of "The Best Investment Advice I Ever Received: Priceless Wisdom from Warren Buffett, Jim Cramer, Suze Orman, Steve Forbes, and Dozens of Other Top Financial Experts" (Warner Books 2006).
Before CNBC, Claman served as an anchor and reporter for Boston's WHDH-TV (NBC). She was also a contributing correspondent for NBC's syndicated daytime program RealLife. Prior to that, she anchored a two-hour daily talk show, The Morning Exchange for WEWS-TV (ABC) in Cleveland. She received an Emmy for her work on The Morning Exchange.
A graduate of the University of California, Berkeley, Claman began her on-air career at WSYX-TV (ABC) in Columbus, OH as a reporter and later a weekend anchor. Earlier, she was a news associate for KCBS-TV (CBS) in Los Angeles where she was the youngest person in the station's history to win a local Emmy Award for Best Spot Producer.
FOX Translator
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A popular Wendy's commercial in the 80s made famous the question: "Where's the beef?" Good one. And here's an even better one: "Where's the alpha?" You might want to whip this one out the next time you meet with your portfolio manager.
Alpha is the over-and-above-the-expected return. It is the "value added." Therefore, it makes sense that a positive alpha means an investment has outperformed its market-predicted return, while a negative alpha would mean just the opposite. The expected return is calculated by a formula that takes into account the investment's level of unavoidable risk (aka beta).
Ever stepped into an elevator and after the doors close you become aware of an almost-suffocating scent coming from the woman next to you who must have bathed in perfume? Well, as you know, once the doors close you can't escape the smell until the ride is over. This is similar to beta, which is risk that can't be reduced or diversified away. A measure of "systematic" or market related risk, beta is used as a measure relative to a certain index -- such as the S&P 500.
So, for example, let¿s say your portfolio is managed to compete against the S&P 500. If you generate a better return than the index while not taking on added risk (standard deviation of returns) then you get alpha. Low beta means the market-related risk is low and vice versa for high beta.
Another example, let's say a mutual fund or stock has a beta of 1.5 relative to the S& P500 ¿ that means it is 1.5
times as risky. So, over time, if the S&P 500 goes up 1%, your portfolio should be up 1.5% plus (one can hope) some percentage
of alpha. If the S&P 500 is down 1%, your portfolio should be down 1.5%.
Alpha and beta are based off of linear regression of a set of data. Warning: this may cause a high school fifth-period flashback,
but it will be over before you know it:
The equation for a line is Y = a + bX.
a = alpha (the Y intercept - the added value)
b = Beta (the coefficient you multiply X by)
X = S&P 500 (in this case)
Y = your portfolio
