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Non-Tech : IIH -- Internet Infrastructure Holdrs
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To: Beltropolis Boy who wrote (9)6/16/2000 12:03:00 PM
From: Wizard   of 10
 
Well that is interesting but I don't think that its going to work. The folios have in effect brought an institutional tool (program trading) to the mainstream. However, institutions and individuals think about portfolio management completely differently. I don't think institutional strategies are ever going to be adopted by the public.

Personally, I like to have a reasonably diversified list of longs, carry a few shorts at times and then would also like to get some extra market exposure (long or short) off and on (especially if using margin). I like the HOLDR's/Folio's in concept for this last part because they are easy to trade and margin should be used carefully when dealing with inherently volatile securities. The HOLDR's dilute some of this volatility but are more attractive to me (because of their upside potential) than buying NASDAQ 100 futures or anything else.

I might be interested in using something like a folio but I don't think they are going to ever catch on in general. Most individual investors just have a list of stocks they have accumulated one by one over the years and don't think about the portfolio as a whole (the covariance between securities). I like the IIH because I like most of its constitutents. However, VRSN now dominates the IIH (19%) because of its acquisition of NSOL. I am less interested in using this security in the future because its losing its diversification. Verisign is a midcap type of company selling at a large cap valuation. That is not my style. I would rather own AOL than VRSN at current prices.
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