Q: This may seem like an odd question to some but I would like to make sure I actually understand what is being said rather than assuming I do. On business shows guests say, in different ways, they have increased their cash positions or decreasing their equity exposures. Although such statements might seem rather straight forward, can they actually have different meanings depending on who is saying it? All kinds of guests appear from pure 100% equity fund managers to individuals actually managing diversified portfolios for clients.
Assume one is operating with a vision of a fully invested portfolio having 40% fixed assets which includes their cash portion and 60 % equities.
When guests generally talk of decreasing their equity exposure or increasing cash positions is there a standard meaning? Say someone cut their equity exposure by 10%. Would that typically mean their equity position has decreased to 50% (60%-10%) or does it mean they reduced it by 6% (60% X 10%) to 54%? Conversely, how might one interpret a 10% increase in cash?
Some managers talk of maintaining gold positions. If a balanced portfolio manager referred to a 5% weighting in gold would that generally mean 5% of the total portfolio or the equity portion (60% X 5%=3%)?
Needless to say, substitute a higher number and it would make for meaningful differences depending on how you calculate things? Listening to some business show guests, I get the impression it does not always mean the same thing but no elaborations are ever asked by interviewers.
Could you please clarify what is generally meant? Thank you.
Mike
Assume one is operating with a vision of a fully invested portfolio having 40% fixed assets which includes their cash portion and 60 % equities.
When guests generally talk of decreasing their equity exposure or increasing cash positions is there a standard meaning? Say someone cut their equity exposure by 10%. Would that typically mean their equity position has decreased to 50% (60%-10%) or does it mean they reduced it by 6% (60% X 10%) to 54%? Conversely, how might one interpret a 10% increase in cash?
Some managers talk of maintaining gold positions. If a balanced portfolio manager referred to a 5% weighting in gold would that generally mean 5% of the total portfolio or the equity portion (60% X 5%=3%)?
Needless to say, substitute a higher number and it would make for meaningful differences depending on how you calculate things? Listening to some business show guests, I get the impression it does not always mean the same thing but no elaborations are ever asked by interviewers.
Could you please clarify what is generally meant? Thank you.
Mike
