Apply Wealth Creation to Explore the Importance of Well-Diversified Portfolios

• Main Authors: LIAO, YEN-SHU, 廖炎樹
• Other Authors: HSU, CHI-SHENG
• Format: Others
• Language: zh-TW
• Published: 2019
• Online Access: http://ndltd.ncl.edu.tw/handle/5qm8k4

碩士 === 東海大學 === 高階經營管理碩士在職專班 === 107 === Using 1,803 listed and delisted companies in the Taiwan stock market during the period of January 2009 to December 2018 as a sample, this study calculates wealth creation dollars and the percentage of wealth creation from investors’ perspective of each sample company, and explores the importance of constructing a long-term well-diversified portfolio. The empirical results show that, based on the rank of wealth creation dollars, top 132 companies account for 90% of the total amount of wealth creation dollars from all sample companies. In other words, 7.32% of sample companies create 90% of the total wealth creation. Moreover, top quintile companies account for 60% of the total amount of wealth creation dollars. That is, 1.11% of sample companies represent 90% of the total wealth creation. The above findings indicate that wealth creations of sample companies are highly positively skewed. This right-skewed distribution supports the importance of constructing a long-term well-diversified portfolio. A non-diversified portfolio may not contain a small number of star companies with highest dollars of wealth creation such that it underperforms the stock market. Accordingly, it is better for individual investors to invest in the stock-market index funds or ETFs. Key words: Wealth Creation Dollar，Diversified Portfolio