Equity Allocation as percentage of Total Capital

My 0.002 cents - an IRR of 54% is eye-popping and how I wish I could do that over a long period of time.

This however poured water on it all. When you say only 10% is invested in equities, I am not sure if it is starting or ending 10%. This means 90% is in assets besides equities. If he is an entrepreneur as you mention, then maybe a good part of the capital is deployed there. If so, then it makes sense to consider deploying capital, instead of in the business, into equities.

But my larger point is that returns should always be looked at total capital and not just the portion allocated to the specific asset class. No doubt we will learn stock-picking from the portion allocated to equities, but we also learn from the %age allocated to equities. A compounding of total capital at 20% is superior to a compounding of 55% on 10% of capital, say over 5 years, while the rest chugs along at risk free rate, even though, given the market we are in, we are likely to snub that guy who compounded 20% of the entire capital.

Cheers,

P.S: This is in no way to undermine the expertise of the person; if anything I can only learn from him.

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