Learn the terms · Longer read
Concentration: how much of your portfolio one holding decides
How much of your portfolio's total value sits in a single holding - and, one level up, in a single sector. The bigger the share, the more one company's or one industry's fortunes decide yours. Trendentum states the number and shows both sides of the argument about it.
What it measures
Take each holding's current value - shares held times the latest price - and divide by the total. The largest of those shares is your concentration. A portfolio of ten equal holdings has a top position of 10%; one where a single stock has run hard might find it at 40% without a single new purchase having been made. Concentration drifts, because prices do, which is why Portfolio Health recomputes it on every refresh rather than when you last looked.
Sector concentration is the same arithmetic over industries: a book that is 99% Basic Materials is diversified across companies and not at all across the thing that moves them. The sector map shows this alongside how closely each sector's index has moved with your holdings at today's weights, because holdings in different sectors can still move together - and holdings in the same sector sometimes do not.
The argument on both sides
This is one of the few places where serious investors disagree, and Trendentum shows the disagreement rather than resolving it. One tradition holds that spreading across a few dozen holdings is the plain protection against being wrong about any one of them; Benjamin Graham's writing puts a range on it, and the Talmud's rule of thirds is a far older version of the same idea. Another holds that concentration in a handful of businesses you understand deeply can lower risk rather than raise it, because the discipline of knowing them well is itself a protection; Warren Buffett has argued this in his letters. Portfolio Health quotes all three verbatim with their sources, and the principles page carries Graham's and Buffett's.
Neither view is wrong in the abstract, and which one fits depends on things the app cannot see - how well you know the company, what else you own outside this portfolio, how you would react to a 40% fall in your largest position. So Portfolio Health tells you the number, tells you why it matters, quotes both sides, and stops.
What it is not
A concentration figure is not a warning and not an all-clear. 40% in one stock is a fact; whether it is a problem is a question about you. The app never tells you to reduce a position, add to one or rebalance, and it removed a sentence that came close to doing so - the arithmetic of "what would bring this down to your second-largest position" was a lever, and a lever is advice in the shape of a fact.
It also measures only what you have entered here. A portfolio that is a small slice of your wealth reads as concentrated when your whole position is not, and vice versa. The number is only as complete as the holdings you gave it.
An example
A portfolio of six holdings started roughly equal. One of them doubled over a year while the others drifted, and it is now 41% of the total without a single share having been bought. Portfolio Health's headline reads "Your portfolio's biggest story right now is concentration: ABC alone is 41% of your total position value", the finding under it explains what that share means for how one company's news lands on the whole, and the three quotations sit beneath with their sources. The sector line adds that four of the six are Materials. Every one of those is a fact about the book today; what to make of them is the owner's.
Where you’ll see it on Trendentum
- Portfolio Health on the dashboard - the headline and the concentration finding
- The sector map's "Your share" and "Moves with your book" columns
- The investing principles page, for Graham's and Buffett's quotations and their sources
Every term on this page is used the same way across the app, and the exact thresholds behind each rule are on the methodology page. Trendentum explains every call and never tells you what to do with it.