tag:blogger.com,1999:blog-19649274.post6578898808698246029..comments2024-03-27T17:16:12.789+05:30Comments on The Leap Blog: Direct participation in the Indian equity market: First estimates of some basic factsAjay Shahhttp://www.blogger.com/profile/03835842741008200034noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-19649274.post-90429845107827411752016-11-21T09:05:46.874+05:302016-11-21T09:05:46.874+05:30Nice analysis. Just one point: Average equity port...Nice analysis. Just one point: Average equity portfolio value is Rs.1.33 million. What is the median value?Chandraguptahttps://www.blogger.com/profile/13272014002892802203noreply@blogger.comtag:blogger.com,1999:blog-19649274.post-25974786630114282212016-11-11T15:12:45.626+05:302016-11-11T15:12:45.626+05:30The conclusion of the article that present equity ...The conclusion of the article that present equity investors are "not wise" appears to be questionable. The methodology appears to be in-appropriate to reach such an over-sweeping conclusion.<br /><br />The conclusion is based upon the premise/assumption that a wise investor holds multiple securities from diversified sector. Hence, for an wise investor, the portfolio return should match or exceed the return of an hypothetical portfolo which is well diversified.<br /><br />The above criteria has been tested by a frequentist regression methodology (i.e. by regressing portfolio return of 4.8 million individual returns on the return of the hypothetical portfolio).<br /><br />The results of the frequentist regression methodology is obviously going to be impacted by 50% of the sample which has a portfolio value of less than 40K INR. It appears very unrealistic to assume that with such low value portfolio, an investor will have multiple equity investment.<br /><br />The results would be more robust if analysis is limited to high portfolio value individuals (say more than 250 K INR).<br /><br />Otherwise, the over-sweeping conclusion appears to be simply a reflection of the extremely skewed portfolio value distribution rather than to do anything with investor intellect.<br /><br /><br />Anonymousnoreply@blogger.com