Frazier Allen: Concentrated Positions Can Pose Portfolio Risk
May 4, 2016
Clarksville, TN – It is important for investors to understand that the very asset that helped create significant wealth may also pose the biggest risk to their future financial security. A concentrated equity position is defined as a substantial portion of an investor’s wealth (10% – 15%, or more in some cases) tied in one stock.
These highly concentrated positions can result from employer stock and option incentives, long-term employment at a single company, a large inheritance, etc.
Holding a large, single-stock position creates significant risk and increases portfolio volatility, which can have a catastrophic effect to an investor’s future financial security.
Concentrated positions may create wealth but they may not protect it.
