MRV Communications (MRVC) opinions? Message Board

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Technology Stocks : MRV Communications (MRVC) opinions?

MRVC 9.975

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Aug 15 5:00 PM EST

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To: jung, haeoh who wrote (819)	11/24/1996 8:53:00 PM
From: Dan Ross	of 42804

No, they do not. However, most funds don't want to own too many stocks since once you hold > 40 stocks, the diversifiable risk in a portfolio diminishes quickly close to 0. All that is left is the market risk which would take way too long to explain. This info. is explained with all kinds of Financial equations and theories. Our finance teacher had us do a portfolio while varying the number of stocks involved in the portfolio. This theory was proved. However, small stocks tend to have a far greater BETA (financial lingo. for risk and deviation from norm. in terms of volatility) and therefore demand that you possess close to 50 before risk diminishes substantially in terms of diversifiable risk. This is why when you see mutual funds with 5, 4.5, 4, 3.5, and 3% as their top 5 holdings, they are VERY bullish on these stocks. 40 stocks = 2.5% for each 50 stocks = 2% for each. Unless a mutual fund is small, for them to own 2% would be a HUGE chunk of MRVC's ahares. If you want any more info. let me know Dan Ross

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