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How concentrated is your portfolio

Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Our stocks. Buy hold or sell - The help ourselves Board
Forum Discription: What do we do with our stock portfolio.Ask any member and for a short opinion.If you know something about a particular stock do tell the forum.These will later be put in as seperate topics
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1898
Printed Date: 26/Jun/2024 at 10:09pm


Topic: How concentrated is your portfolio
Posted By: praveen
Subject: How concentrated is your portfolio
Date Posted: 06/Sep/2008 at 1:05pm

I was thinking of a quantitative measure for this. 

I think we can apply HERFINDAHL-HIRSCHMAN INDEX (HHI) It is used to measure industry concentration but we can apply to our portfolios as well.
 
This is what http://www.usdoj.gov/atr/public/testimony/hhi.htm - http://www.usdoj.gov/atr/public/testimony/hhi.htm  has to say
 
 

"HHI" means the Herfindahl-Hirschman Index, a commonly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For example, for a market consisting of four firms with shares of thirty, thirty, twenty and twenty percent, the HHI is 2600 (302 + 302 + 202 + 202 = 2600).

The HHI takes into account the relative size and distribution of the firms in a market and approaches zero when a market consists of a large number of firms of relatively equal size. The HHI increases both as the number of firms in the market decreases and as the disparity in size between those firms increases.

Markets in which the HHI is between 1000 and 1800 points are considered to be moderately concentrated, and those in which the HHI is in excess of 1800 points are considered to be concentrated. Transactions that increase the HHI by more than 100 points in concentrated markets presumptively raise antitrust concerns under the Horizontal Merger Guidelines issued by the U.S. Department of Justice and the Federal Trade Commission. See Merger Guidelines § 1.51. 

A lot of TED members are concentration believers.  Would just want to know your HHI score for your portfolio.
 
As on Sept 5. Sensex has a HHI score of 1220 and Nifty has a score of 408
 


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The quest for knowledge is a never ending Journey


Replies:
Posted By: basant
Date Posted: 06/Sep/2008 at 3:55pm
Good concept, guess I read it somewhere. My score is 3450.


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: vijaygawde
Date Posted: 06/Sep/2008 at 4:28pm
Well.. My score is 2110
 
 


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Diversification is protection against ignorance, it makes little sense for those who know what they’re doing.

Posted By: praveen
Date Posted: 06/Sep/2008 at 5:15pm
Originally posted by basant

Good concept, guess I read it somewhere. My score is 3450.


Thats really some concentration


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The quest for knowledge is a never ending Journey

Posted By: master
Date Posted: 06/Sep/2008 at 5:28pm
Mine at 676

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Someone’s sitting in shade today because someone planted a tree long time ago.

Posted By: basant
Date Posted: 06/Sep/2008 at 7:51pm

Let us get the others to chip in with their score.



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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: praveen
Date Posted: 06/Sep/2008 at 8:16pm
Mine in ~400. The score probably reflects my discomfort when a stock reaches the 10% threshold level

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The quest for knowledge is a never ending Journey

Posted By: Shikari_Shambu
Date Posted: 06/Sep/2008 at 9:37pm
Mine is 1074

I guess the maximum score one can have is 10,000 i.e all money(100%) is in one stock. Having 2 stocks with 50% each brings down score to 5000..interesting..

Posted By: basant
Date Posted: 06/Sep/2008 at 11:05pm
This thread needs more participation then it is actually getting.

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: omshivaya
Date Posted: 06/Sep/2008 at 11:12pm

My score is around: 4727



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The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it

Posted By: paragdesai
Date Posted: 06/Sep/2008 at 11:38pm
My score is 968.

Posted By: shivkumar
Date Posted: 06/Sep/2008 at 1:29am
some of us are ashamed at the low scores that we would getShocked

Posted By: Vivek Sukhani
Date Posted: 07/Sep/2008 at 8:03pm
Originally posted by shivkumar

some of us are ashamed at the low scores that we would getShocked
For me its the other way round.....the moment I put in 65 squared, the resultant number that I got was 4225....my fingers started to tremble and I decided not to key in any more numbers....!!!!!
 
However, it does indicate that I have to pare down my family's holdings in that company.....that seems to be the only silver lining from this experiment for me.


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Jai Guru!!!

Posted By: jain208
Date Posted: 08/Sep/2008 at 3:01pm
My score is 1882.

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The more it changes, the more it’s the same thing.

Posted By: gcpradhan1
Date Posted: 08/Sep/2008 at 4:36pm

My score is 1636 ! Does it qualify for a concentrated Portfolio.? My top 5 holdings contribute exactly 80% of total portfolio and there are 8 numbers in all in my portfolio !



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Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years - Buffet

Posted By: smart_prof
Date Posted: 08/Sep/2008 at 5:28pm
My score is   438

Although top 5 stocks 38% & top 10 stocks consists of 56.29 % of the portfolio



Posted By: leo2007
Date Posted: 08/Sep/2008 at 6:20pm
My score is 963

Posted By: abhishekbasu
Date Posted: 12/Sep/2008 at 12:26pm
My score is 965.

But I am in the process of actively pruning my portfolio and concentrating my holdings.

Posted By: investor
Date Posted: 12/Sep/2008 at 2:46pm
My score is(was) 5150 (well not right now since i am mostly in cash last 5 months, but i calculated it based on weightage values just before i sold out)


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The market is a place where people with money meet people with experience.
The people with experience get the money while people with money get experience!

Posted By: vishu013
Date Posted: 12/Sep/2008 at 4:36pm
Mera number, 735

Posted By: basant
Date Posted: 12/Sep/2008 at 8:06pm
Originally posted by investor

My score is(was) 5150 (well not right now since i am mostly in cash last 5 months, but i calculated it based on weightage values just before i sold out)
 
Cheers (pun intended) Thumbs%20Up


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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: pramodjain
Date Posted: 12/Sep/2008 at 11:23pm
My Score is 3342

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"We simply attempt to be fearful when others are greedy, and greedy only when others are fearful."

Posted By: ganeshbhandary
Date Posted: 12/Sep/2008 at 11:43pm
Mine is 810

Posted By: MissingLink
Date Posted: 20/Sep/2008 at 9:43am
My score is 3400

Posted By: kanagala
Date Posted: 20/Sep/2008 at 10:53am
My score is 1610.

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While one person hesitates because he feels inferior, the other is busy making mistakes and becoming superior.

Posted By: kanagala
Date Posted: 20/Sep/2008 at 11:01am
Originally posted by omshivaya

My score is around: 4727



Some stock you have invested more than or equal to 49%.


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While one person hesitates because he feels inferior, the other is busy making mistakes and becoming superior.

Posted By: basant
Date Posted: 20/Sep/2008 at 11:37am
YES

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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in

Posted By: tigershark
Date Posted: 20/Sep/2008 at 11:46am
does a falling rupee have any effect on WIT? some poeople have becom very witty after fall of rupee  on a side note i cant understand why rupee has depriciated by 15% yr on yr  is our economy so bad that we r headed for balance of payment situation and rupee devaluation? or r poeople taking adv of our free mkt policy

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understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things

Posted By: bassein
Date Posted: 20/Sep/2008 at 11:56am
I don't know much on the subject but there were reports that a parallel rupee trading system exists and is partly the cause.

Posted By: Invest_in_India
Date Posted: 21/Sep/2008 at 2:19pm
Mine is 1045.

Top 6 holding accounts for 75% of my portfolio


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Cheers,
Raj

"Que sera, sera,
Whatever will be, will be;
The future's not ours to see.
Que sera, sera,
What will be, will be.
Que Sera, Sera!"

Posted By: SORUB
Date Posted: 21/Sep/2008 at 4:21pm
mine is 2086

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K.I.S.S(keep it simple silly) is the most easy management formula i ever came across!!! but it is very hard to follow!!!

Posted By: kanagala
Date Posted: 21/Sep/2008 at 9:41pm
Originally posted by basant

YES


Got it.


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While one person hesitates because he feels inferior, the other is busy making mistakes and becoming superior.

Posted By: muralimohan001
Date Posted: 21/Sep/2008 at 10:05pm
Mine is 1500

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If money is your hope for independence, you will never have it. The
only real security that a man can have in this world is a reserve of
knowledge, experience and ability.


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