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Author: HelicalZz Big gold star, 5000 posts Old School Fool Coverage Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 8754  
Subject: Re: INDIA FUND (THE) (NYSE:IFN) Date: 9/16/2006 10:12 PM
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menachem

How do each of you measure a companies risk ?

Good question. I would have to say subjectively not quantitatively.

I do favor solid dividend payers for the bulk of my portfolio, and within different allocations. Does this make me low risk? I don't think so as I hold no fixed income portion at all with no plans of doing so for a while (I'm 43).

Subjectively, I would measure risk by a few criteria.
- Competitive advantage / moat to competition
- Company history / reputation / years in the industry
- Nature of the business
- by volatility

I allocate with traditional labels. In my IRA (my largest account) this is roughly

30% US Income securities (~10 holdings and DVY)
15% Value (2 funds)
25% Foreign - mixed bag here.
10% REIT and REIT like - 4 holdings (I do include ETV in this allocation - whatever?)
20% Speculative, mostly HG types and small cap value ~ 10 holdings.

Now about 2 years ago I did try to break this into Risk levels - just speculative high, low, and medium based solely on my own impressions. The results surprised me, I was taking a bit more risk than I originally thought (don't still have the numbers). I recall that I did jigger down the speculative portion from 25% to 20 and added to the foreign holdings (mostly dividend payers - but also MINDX - which I would classify as high risk). Interestingly two of my REIT holdings NLY and AFR I would also currently classify as high risk - this from within a traditionally low risk allocation.

It's a worthwhile exercise that I would recommend to anyone.

The other way I look at my port is to look at my worst performers. Do I want to add to them. In my IRA, I have added to seven of the 10 worst performers (1 is a relatively new position and I am considering adding to one of the two remaining). Six of the seven secondary positions are showing gains - I feel pretty good about that.

Zz
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