Can someone clarify the term “Alpha” when referring to investment mangagers?
I would like to see if someone could give me a clear and concise definition of the finance term “Alpha”, and its relation to Beta.
Alpha is the return of a fund or investment over and above a benchmark, such as an index like the S&P 500.
Beta is a measure of risk of an investment. It measures the volatility of an investments returns compared to the returns of a benchmark index, such as the S&P 500. The larger the volatility, the beta, of the returns of the investment compared to the benchmark the higher the expected return, according to the Capital Asset Pricing Model.
What is the difference between a holdings company and a private equity firm?
I mean blackstone buys over companies and they are considered a private equity firm. But BerkshireHathaway also buys over companies but they are considered a holdings company.
Very simply put, a holding company is a co. Which owns 51% or more in the equity of another co. (called its subsidiary). Holding companies are usually for the long haul, and can exist for decades (think Coca Cola).
Private equity firms invest in non-public companies and typically hold their investments with the intent of realizing a return within 3 to 7 years. Generally, investments are realized through an initial public offering, sale, merger, or recapitalization. Private equity groups tend to focus on more mature businesses, often contributing both equity and debt (or some hybrid) to the transaction. The firms were commonly called leveraged buyout firms (LBO) in the 1980s.
As you can see from the following definition of consolidation in the context of private equity firms, they can form holding companies to achieve their purpose. Thus, a private equity firm can be a holding co. The 2 are not mutually exclusive.
Consolidation : Also called a leveraged rollup, this is an investment strategy in which an LBO firm acquires a series of companies in the same or complementary fields, with the goal of becoming a dominant regional or nationwide player in that industry. In some cases, a holding company will be created, into which the various acquisitions will be folded. In other cases, an initial acquisitions may serve as the platform through which the other acquisitions will be made.
The following articles may help you understand this better.
How do I search for/identify an ad agency to help me build a brand for my startup company?
Looking for a small to midsize firm that will be focussed on my needs yet be reasonably priced and prepared to handle additional needs as we grow. Immediate needs include branding, logo design, messaging, collateral, and web design. With so many options how do I narrow my search?
In my experience and opinion an advertising agency will not provide the best return on your investment.
This is based on more than 10 years working on marketing for small to mid-sized companies (1-12 million in annual revenue). Creative houses and advertising agencies charge more for the end product than you can get elsewhere and most importantly they generally do NOT craft your marketing positioning. Advertising agencies can create very visually appealing collateral and can match the image that you define for them, but the typical advertising agency will not take the time to learn your specific business and as such can not adequately recommend the image you should project to the market.
Look for an independent. As someone stated in an earlier response, find them by browsing local company sites and identifying the ones you like the best and feel are the most compelling. Then call those companies, get in touch with the person responsible for their site and be direct with them. Ask them who produced the site, but even more important in my opinion ask them who crafted the message, wrote the copy, and determined the corporate identity. (Important – start by telling them why you are calling them – i.e. That you found their site to be the most impressive and give them specific reasons.) This or these, are the people you want to get in contact with. If it is a single person (and the company is not too large) and that person is employed by the company ask the person you are speaking to point blank if it would create any complication for you to solicit off hours temporary contract work from that person. You will be surprised, especially if the person you are talking to is this individuals direct boss, they generally will be glad to help their people find additional outside work. As director of marketing and communication I LIKED my people doing outside work. It kept them sharp and helped keep them from getting stuck in a creative rut developing the same content over and over again for our company.
I want to make this point very clearly, because I have seen so many companies make this mistake: You MUST define your target image first before engaging in any branding. Your target image must be based on a clear and thoughtful understanding of your target audience and business sector as well as your marketing strategy, product offering and key distinguishing value propositions. It can NOT be emotional or subjectively biased – i.e. “You just like the way this or that looks”.
Does you business sell to other businesses or to consumers? If your company sells services or products to other businesses your marketing message is far more critical than your graphic identity. Even if you are a B2C company Marketing comes before branding. You need to identify the following:
Who is your target audience?
Why do they want your product?
Why would they not buy someone else’s product instead of yours?
What do they value most? (Creativity, stability, customer service, convenience, turn-key solutions, ease of use etc)
What are their pain-points and how does your product overcome them?
What distinguishes your product or service from the rest of the competition?
The answers to these questions should identify the image you want to create. Go out on the web and find companies that are successful in your exact business model or in a similar sector. Review their image and branding strategies. Benchmark them as the beginning foundation for your corporate identity, then modify from there based on your company’s key distinguishers.
If you don’t feel qualified to do this yourself find someone who is and can. Your message and your identity are the source of everything else produced for your company. If you don’t have that definition in place then the best creative design work will not help you.
I have seen organizations with hideous, and I do mean hideous graphic design and corporate branding doing 9 million annually with fortune 500 clients based solely on the strength of their marketing message. (I’m talking about datasheets literally created and printed directly from PowerPoint here.) I have likewise seen companies with incredibly slick designs selling absolutely nothing because the copy on their website and in their marketing collaterals simply does not communicate any value, continuity, or even demonstrate an understanding of their target audiences needs.
I am a very strong proponent of professionally designed branding and image, but without the marketing message as the seed for this branding, and as the legs to carry it to a sale, it is worthless.
Graphic design work: corporate logo (and branding), datasheets and product slicks, websites, business cards and more can be outsourced to independent freelance designers. Specify in detail the image you are trying to convey and they can produce it, at a fraction of the cost if sourced through a creative house.
A logo can be accomplished for $500.00 or less.
A datasheet (if you write the copy) can be accomplished for less than $1,500.00.
Webpage templates (and you need maybe 4 templates for a startup website) can be sourced for as little as $500.00 per template. Then adding pages to the site should be a matter of sourcing a couple new images and dropping in content. If outsourced to an independent new pages from templates could cost in the area of $100 – $200 and less if no new graphics are required.
Compare those costs to what a creative or advertising agency quotes.
The most critical talent for you to find early on is someone who understands your product and its unique value in the industry and can clearly bear that out through product positioning and solid copy. Everything else can be outsourced, but this talent needs a strong and long term relationship with your company.
It takes time to learn your product and more time to craft and hone the message.
How do you tell the diference between short term and long term investments?
Some people like Warren Buffet invest there money in stocks that will make them money in like 10 or 20 years. Other people will invest there money in stocks that will make them money in like less than 2 years. when buying stocks how can you tell if that stock will make you money years from now or make you money sooner than that
From an accounting standpoing, the only difference between a short term and long term investment is a short-term investment is held for less than a year. Long-term investments are held longer than a year.
From a trading standpoint, it depends on how you specifically define short-term. For you it could be 1 month, but for me it could be 1 week. For day traders, it could be 30 minutes for short-term and several hours for long-term (I know a daytrader that classifies his investments like this, and he’s wrong more than 50% of the time for fwiw). Warren Buffet, on the other hand will usually stick to the accounting definition as he uses a more suffistocated form of portfolio management
The idea about holding period versus future returns are kind of worthless. In 2001, you could have said you expect to earn at least 5% per year on coupons in treasuries, but we know now that’s far less.
How long do you think until humans live in outter space and where would they go?
Eventually sometime we are going to have to get off of planet earth. The sun will eventually explode and pretty much clear out this universe. Where and when would humans go? Sometimes i feel like that game borderlands will end up being how life is lived on earth when most of the humans retreat. I know sounds crazy but its the crazy ideas that no one thinks of/believes that end up happening. # #Oh and a BONUS# #…. What is with all this zombie hype/obsession?
The death of the Sun won’t be for five billion years, the average time for a species from first appearance to extinction is ten million years and humanity is about two million years old. It is unlikely to expect humans to still exist in five billion years and whatever would exist would hardly be considered human by any definition we have today. You don’t really have to plan for the death of our Sun. Other global disasters do occur but are of such low probability that it isn’t reasonable to plan for them as well. Colonizing outside of Earth is the only sure solution against global disaster but it would not be the motivation for colonization.
When America was colonized, it was because it was possible to invest in ventures that paid a suitable return on investments in beaver pelts and Mayan gold. It is pure economics that will dive colonization. We do not have an economic model that works yet, space based solar power is estimated at $23 per kwh and asteroid mining breaks even at $518 million per ounce. These numbers will change eventually and colonization will occur.
Moon bases and colonies on Mars will happen because they can be small and hence inexpensive but both have low gravity. Adults can mitigate the degenerative effects of low gravity with exercise and medication but children would develop with serious deformities. Neither the Moon nor Mars are good permanent colonies but they are good sources for materials and resources.
It would be far better to colonize O’Neill Cylinders, Bernal Spheres and Stanford Torus’s. Full simulated 1-g gravity can be achieved with rotation and gardening a cityscale biosphere would be far easier than terra-forming a moon or planet. Large structures are easily built in space where weight need not be supported till the structure is complete and materials are available from asteroids, comets and moons. There are also no planetary gravity well or atmospheric re-entry and solar power is plentiful.
Also, a self sustaining space habitat with nuclear power and propulsion is in fact an interstellar generation ship. Given the travel times to nearby stars, there is simply no return on investment in an interstellar spaceship but with space habitats, you would have them by default.
It’s only a planetary bias and a lack of imagination that we only think of terra-forming and colonizing only planets and moons. Colonizing space itself brings far more options.
If we colonize the solar system in space habitats to the point where our population in the habitats far outnumber that of Earth, then it becomes possible to evacuate all of humanity from the solar system should it ever become necessary to do so. The space habitats don’t even need to find habitable planets, they could comfortably exist with asteroids and comets for resources, they could even exist between the stars.
Those who remain on Earth would be the ones who wish to live with limited resources, to live sustainably. They would try to live in agrarian societies. I would imagine it to be more like the mortals of ancient Greece compared with the gods of Olympus as one group embraces the heavens while the other embraces the Earth. There is no indication that it would be the anarchy of a point and shoot game.
The zombie obsession has to do with media, the ease of making point and shoot zombie games and the currently running zombie mini-series on TV. It also has to do with the attraction of being a survivalist when society breaks down.
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