Overweight (stock market)
From Wikipedia, the free encyclopedia
Overweight is part of a three-tiered rating system, along with "underweight" and "equal weight", used by stock analysts to indicate a particular stock's attractiveness. If a stock is deemed "overweight" the analyst is saying, in his opinion, the stock is a better value relative to other stocks he covers in the same sector.[1]
For example, if you have 10% of your stocks in Retail, 25% in Manufacturing, 50% in Hi-Tech, and 15% in Defense, and your broker tells you that Retail is "overweight", then your broker is implying that a larger percentage of your stocks should be in Retail.
[edit] References
- ^ Updegrave, Walter (Aug. 19, 2003). Glossary please! What do terms like "overweight" and "underweight" mean, anyway?. CNN Money Magazine, Ask the Expert. Article on CNN.com
The article gives the following example:
For example, if you have 10% of your stocks in Retail, 25% in Manufacturing, 50% in Hi-Tech, and 15% in Defense, and your broker tells you that Retail is "overweight", then your broker is implying that a larger percentage of your stocks should be in Retail.
This is an example of an underweight portfolio where the investor is being advised to increase their investments in Retail. For an overweight example the line would be more appropriate stating:
For example, if you have 10% of your stocks in Retail, 25% in Manufacturing, 50% in Hi-Tech, and 15% in Defense, and your broker tells you that Hi-tech is "underweight", then your broker is implying that a smaller percentage of your stocks should be in Hi-tech.
