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Alpha and Beta

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

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Jay Leno Emcees Public Counsel Award Dinner Honoring Marian Wright Edelman

 
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LOS ANGELES, May 16, 2008 /PRNewswire-USNewswire via COMTEX News Network/ ----- Intel Corporation to Receive 2008 Corporate Achievement Award -

Manatt, Phelps & Phillips, LLP to Be Honored With Law Firm Pro Bono Award

- Child Advocate Daphna E. Ziman to Receive Special Award -

Emmy Award-winning comedian and "Tonight Show" host, Jay Leno, will serve as master of ceremonies for the 2008 William O. Douglas Award Dinner on May 14, 2008, when Public Counsel will present its highest honor, the William O. Douglas Award, to acclaimed civil rights leader and children's advocate, Marian Wright Edelman.

The Award honors Mrs. Edelman for her lifelong advocacy on behalf of disadvantaged Americans. Under her leadership, the Children's Defense Fund has become the nation's strongest voice for children and families. She helped found the Washington Research Project, making hunger a national concern and leading to the expansion of federal nutrition programs that today serve millions of children and families. She is the first black woman admitted to the Mississippi Bar and directed the NAACP Legal Defense and Educational Fund office in Jackson, Mississippi. In 1968, she served as counsel to Dr. Martin Luther King, Jr.'s Poor People's Campaign.

Mrs. Edelman said, "As we recognize the 40th anniversary of Dr. Martin Luther King, Jr.'s Poor People's Campaign this year, it has never been more important to be willing to disturb all unjust peace, especially when children's lives are at stake. I am honored to receive this Award and stand beside Public Counsel and its thousands of volunteer attorneys who fight tirelessly against injustice on behalf of the poor and those who desperately need legal representation."

Public Counsel Chairperson Wayne Barsky, a partner with Gibson, Dunn & Crutcher LLP and national co-chair of its intellectual property group observed, "If there is one thing that can unite us in these divisive times, it is the universal desire to improve the lives of children in our community. Fortunately for all of us, Marion Wright Edelman chose to make that her life's work. From the inception of the civil rights movement through this very day, her eloquent and distinguished voice can be heard advocating for children, families and the poor. She is an inspiration to all of us, and at Public Counsel is both humbled and honored to recognize her distinguished service to our nation."

Intel will be receiving the distinguished Corporate Achievement Award for its exemplary leadership in the field of corporate responsibility. Accepting the Award will be Senior Vice President and General Counsel, Bruce Sewell. "At Intel, corporate responsibility is a core value for the company and for our employees. It is an honor for us to be recognized for the positive impact we are having in communities around the world," said Sewell.

In 1997, children's advocate Daphna E. Ziman learned that thousands of children were languishing in the foster care system waiting to be adopted into loving families. The lack of available attorneys made it impossible to schedule adoption hearings for these children. Ms. Ziman helped create Public Counsels "Adoption Day" program, to recruit and train volunteer attorneys in adoption proceedings. Ten years later, over 6,000 children have been adopted through the program. Mrs. Ziman said, "It is time for all of us to take responsibility in a genuine way to create permanent families for children who are abused, neglected and at-risk in our communities."

Manatt, Phelps & Phillips, LLP will be honored with the 2008 Law Firm Pro Bono Award. Manatt attorneys handle dozens of highly complex and technical matters annually, including those affecting vulnerable children and youth. "Manatt's partnership with Public Counsel extends all the way back to its founding in 1970. For at least that long, we have promoted the idea that pro bono work is part of every lawyer's obligation to give back to society. We are pleased to be honored for our service by an organization so thoroughly dedicated to service itself," said William T. Quicksilver, the firm's Managing Partner and CEO, who will be accepting the Award.

Public Counsel President and CEO, Hernan Vera remarked, "This year's extraordinary honorees clearly demonstrate that each of us can do something to improve the lives of others, strengthen our communities and make our nation and our world a better and more hopeful place to live and raise our families. Their accomplishments show that truly great things are possible if we all get involved and contribute something -- time, expertise, resources -- to help achieve these noble goals."

About Public Counsel

Founded in 1970, Public Counsel is the largest public interest pro bono law office in the world. It is a beacon of hope and justice for those who have nowhere else to turn. Last year, Public Counsel provided over $72 million worth of free services to nearly 27,000 people, including abused and abandoned children, families living in extreme poverty, homeless veterans, the neglected elderly, and refugees fleeing torture, persecution and death threats. With the help of over 3,400 pro bono attorneys, paralegals, law students and volunteers, Public Counsel provided over 152,000 hours of critical legal counsel and social services -- all of it free of charge.

Nationally, Public Counsel has been a leader in developing model programs and assisting other pro bono public interest law firms to bring these programs to their communities. In addition to serving the vast Southern California region, Public Counsel is helping to strengthen pro bono public interest law internationally. Public Counsel was instrumental in creating the Instituto Pro Bono in Brazil, that country's first public interest pro bono law firm, and has played a central role in nurturing other pro bono programs in Brazil, Argentina, Chile, Europe, Africa and Australia.

About the William O. Douglas Award Dinner

The Dinner will be attended by approximately 1,400 leaders from the legal, business and political communities who gather together to support Public Counsel's work. The William O. Douglas Award Dinner is one of the largest dinners of its kind in the country, raising approximately $2.5 million annually to support Public Counsel's nationally recognized legal projects and programs.

The William O. Douglas Award is presented annually to a distinguished person of national or international prominence who has exemplified the principles of public service, justice, human rights and freedom of expression. Prior honorees include Secretary of State Madeleine K. Albright, Governor Bill Richardson, Vice President Al Gore, Congressman John L. Lewis, Secretary of Interior Bruce Babbitt, Senator George Mitchell, founding director of the Peace Corps Sargent Shriver, Washington Post editor Ben Bradlee, Secretary of Commerce Mickey Kantor, author Alex Haley, broadcast journalism pioneer Fred Friendly, women's rights advocate Gloria Steinem, television producer Norman Lear, Watergate prosecutor Archibald Cox and others.

PRESS CONTACT INFORMATION

Hernan D. Vera, President and CEO, Public Counsel, 213.385.2977, ext. 104 or hvera@publiccounsel.org

For interviews or more information, please contact John N. Heathcliff at 213.385.2977 ext. 120.

SOURCE Public Counsel

http://www.publiccounsel.org 
Copyright (C) 2008 PR Newswire. All rights reserved
 

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