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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
Home / Personal Finance / Women in Business
Tuesday, May 13, 2008
Create Some Buzz
Create Some Buzz
Marketing doesn't have to empty your pockets if you use a creative approach. Inexpensive ways exist to get people talking about you and your business. The good news is that once people start talking about you, the buzz intensifies. The trick then is to keep up the momentum.
1. Blow them away with a killer website that creates more traffic.
- A website should be the window for potential customers. So keep it shiny and professional, with proper grammar and free of spelling errors.
- Keep your site fresh by updating it periodically. This could include adding a blog that will keep visitors coming back.
- Provide testimonials from customers to validate your product or service.
2. Beef up your branding.
- Keep your logo, colors and slogan consistent on all of your marketing materials, e-mail signature and website. Branding is all about getting people familiar with your product.
3. Distribute a monthly e-newsletter.
- Monthly e-newsletters keep your name in front of people. Keep them coming back for more by packing it full of useful information that supports your product or service.
- Use your website to capture e-mail addresses of visitors who sign up for the newsletter. Offer an incentive to sign up, such as an opportunity to win a free product in a monthly drawing.
- Use a company such as Constant Contact to help manage your e-mail list by tracking those who opt out.
4. Share links.
- Swap links with others to help bring more traffic to your site.
5. Get to the media through press releases.
- Sending out a press release is an effective way to get your news into the medias hands. The release should be newsworthy, and it should clearly explain why someone would buy your product or service and how it will help them.
6. Get involved in your community.
- Donate your product or service to a local event. You'll get your name out there and indicate that your company has a charitable focus.
- Offer to do speaking engagements that showcase your credibility while highlighting your company.
- Volunteer your time. You'll be giving back to your community and getting in front of potential customers.
- Volunteer at your children's school events, such as field trips or PTA activities. It'll give you another opportunity to talk about your business.
7. Take time to network.
- Formal and informal networking get you face time with potential customers. This includes your local chamber of commerce and other networking organizations.
- Online networking groups are free and help you establish credibility beyond your geographic area. But be careful where and how you communicate. You don't want to appear too casual and perhaps unprofessional.
8. Participate in trade shows.
- Booths are expensive; but if the show hits your target market, it can really pay off.
- Be creative about drawing people to your booth. Hold a contest or a drawing to capture their contact information.
- Follow up on leads immediately.
- If you can't afford a booth, attend the show and mingle with as many attendees and vendors as possible.
9. Follow up with cards and e-mails.
- Send cards with any sale or inquiry, or immediately after meeting someone at an event. Include a comment about something you discussed. This will help the individual remember you and make the note more personal.
10. Author a monthly column.
- Most columns include a short biography of you and a link to your website.
- A column provides an opportunity to show that you are an expert in your field.
Good marketing techniques will help you ride the waves of good and bad times in your business. If you keep a few marketing tricks up your sleeves, the waves won't seem so high--or so low. Marketing is a constant testing process to see what gets the best return for you and your business.
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