Portfolio Construction

Modern Portfolio Theory

At Boyar Asset Management we do not subscribe to Modern Portfolio Theory. We do not believe investors are rational, nor do we believe the market is efficient. We therefore do not take into account factors we deem useless and unnecessarily complicated such as beta and mathematical formulas that supposedly help mitigate risk when constructing a client portfolio. To us, the best way to lower risk is by buying an asset at a cheap enough price relative to its intrinsic or private market value.

The Number of Companies in a Portfolio

We have significantly more confidence in our top 10 investment ideas than we have in our 60th best investment idea. Therefore we are strong believers in a concentrated portfolio, with a large percentage of the portfolio consisting of our top ten investment ideas. Our performance may not correlate well to the major indices, but over time our approach we believe will lead to superior investment results.

Sector Weighting

If our clients wanted to mimic the major indices, they could invest in an index fund. Boyar Asset Management is paid to act on our best ideas. Many times this leaves our portfolios looking very different in terms of sector weightings than the major indices. We do, however, constantly monitor each portfolio to make sure it does not contain what we believe to be too much exposure to one company or market sector.