A three-tiered rating system can be applied in the world of stocks and shares.
These labels can refer to individual shares as well as to the proportions of different sectors within a broader held portfolio.
The terms overweight, equal-weight and underweight suggest a perceived value.
For a single stock, its price being equivalent to what the analyst reckons its actual value to be means it is equal-weight. An overweight recommendation means it is thought to be better value for money, as you’re potentially getting it today at a discount, with the price predicted to rise. An underweight one means it is performing above where it ought perhaps be, and if you duly bought, they feel it’d likely fall and you’d lose money.
Within a portfolio, the words point slightly differently. If you held a larger slice of specific sector’s shares than thought prudent, over-exposing yourself too much to it (normally compared to composition of a benchmark index), then you’d be considered overweight. An equal-weight would be an optimum percentage. When underweight, you’d hold less than this.
These offer an interesting angle for solution selling.
We often encounter guarded to-and-fro, especially early on, with the ceremonial dance around our prospect’s value they truly place on our proposal.
Such framing may well be a useful way to ease out of a perhaps reluctant prospect more precisely where your suggested deal may be on the money, or off the mark.
“Is my proposal overweight?”
You can quickly ask if they know about particular company share valuation lingo.
If they feel you’re offering good value then you’d be overweight. And can follow through with discussion about where such value emerges. (Or vice versa).
“Is my proposal equal-weight?”
You can quickly ask if they know about share portfolio jargon.
If they feel you’re not quite as balanced in your solution, displaying a possible mismatch with what they’re hoping to see, then as above, you can gracefully glide onto where and how this can be smoothed.