HELP with Definintions

**Todd** · 05-05-2006, 01:57 PM

Question:
When Reading stuff on market and someone lists the following:
Over-weight - Technology, Industrials, Healthcare
Under-weight - Financials & Utilities
Market - weight - Consumer Discretianary, Staples, Energy, Telecomunincations & Basic Materials.

What are they saying?

What does Over-Weight, Under-Weight, & Market -Weight Mean?

Thanks

**nnuut** · 05-05-2006, 04:00 PM

Todd,
Try this link, I think it will answer all of your questions.
NNUUT
http://www.investionary.com/investment-dictionary.htm
Being overweighted is owning too much of one type of stock or too many stocks within a certain sector compared to other stocks or sectors.
Underweighted is having to little of one company, sector, or country in a portfolio.
Try it you'll like it!

**mlk_man** · 05-05-2006, 04:22 PM

Originally Posted by nnuut

Todd,
Try this link, I think it will answer all of your questions.
NNUUT
http://www.investionary.com/investment-dictionary.htm
Being overweighted is owning too much of one type of stock or too many stocks within a certain sector compared to other stocks or sectors.
Underweighted is having to little of one company, sector, or country in a portfolio.
Try it you'll like it!

Not sure "owning too much" is really the proper though. Makes it seem like one should sell it or something. When an analyst grades out a stock or sector,overweighted means they think that a particular stock or sector will go up so they would buy more of it compared to a similiar stock or another sector. Underweighted meaning they think the sector will go down and neutral meaning they don't really have an opinion because they're not sure which way it'll go.

Just my take anyway.

**mlk_man** · 05-05-2006, 04:29 PM

An example of this is BRL. JPMorgan upgraded it to "overweight" because it's had a 20% drop and they think it should start climbing back up quicker than the average biotech company if the sector as a whole starts or continues to climb.

**Oldcoin** · 05-05-2006, 04:53 PM

http://www.investopedia.com/

Another good link.

**nnuut** · 05-05-2006, 06:48 PM

Must depend on how you are using the word?

**nnuut** · 05-05-2006, 09:47 PM

Investopedia! Woa! Great site!

**rokid** · 05-05-2006, 10:11 PM

Originally Posted by Todd

Question:
What does Over-Weight, Under-Weight, & Market -Weight Mean?

Thanks

Over-weight: Holding more of an asset class than its market capitalization.

Under-weight: Holding less.

Market-weight: Holding the asset class in proportion to its market capitalization.

Using TSP funds, the following approximates world market capitalization:

50% bonds - F fund
25% domestic stocks (20% C; 5% S)
25% foreign stocks (I fund)

G Fund is cash, so it doesn't count.

Holding 100% I? You're over-weighting foreign stocks and under-weighting domestic stocks and bonds.

Holding 100% C? You're over-weighting domestic large cap stocks and under-weighting bonds, domestic small caps, and foreign stocks.

Incidentally, people over/under-weight asset classes to achieve higher returns or less risk.

I hope that helps.