Why Investors Should Avoid Overconcentration
A concentrated position in a single stock can happen to investors for many reasons. They may receive company stock as part of their employee compensation package or they may have bought shares of a single company, hoping to choose a big winner.
However, it’s unlikely that a single stock will outperform the market as a whole. By only selecting a single stock, you can introduce a lot of risk into your portfolio. If your selected stock tanks, it can drag your portfolio down with it. Here’s a look at why concentrated positions are so risky and what you can do to mitigate that risk.
Also in this newsletter…
- Retirement Savings 101
- Money Museums
- Picnic Photos
DOWNLOAD: July 2022 Nest Egg Volume 20, Issue 3