financial markets A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial ma ...

, underweight is a term used when rating stock. A rating system may be three-tiered: " overweight," ''equal weight'', and ''underweight'', or five-tiered: ''buy'', ''overweight'', ''hold'', ''underweight'', and ''sell''. Also used are ''outperform'', ''neutral'', ''underperform'', and ''buy'', ''accumulate'', ''hold'', ''reduce'', and ''sell''. If a stock is deemed underweight, the analyst is saying they consider the investor should reduce their holding, so that it should "weigh" less.{{cite news , first=Walter , last=Updegrave , title=Glossary please! What do terms like "overweight" and "underweight" mean, anyway? , url=https://money.cnn.com/2003/08/19/pf/expert/ask_expert/ , work=

CNNMoney.com CNN Business (formerly CNN Money) is a financial news and information website, operated by CNN. The website was originally formed as a joint venture between CNN.com and Time Warner's ''Fortune'' and ''Money'' magazines. Since the spin-off of Tim ...

, Ask the Expert , date=2003-08-19 , accessdate=2007-01-03 For example, if an investor has 10% of their stocks in Retail, 25% in Manufacturing, 50% in Hi-Tech, and 15% in Defense, and the broker says that Retail is "underweight," then they are implying a smaller percentage of the stocks should be in Retail. The stock's total return is expected to be below the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months.

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Stock market