Preservation vs Concentration: The Single-Stock Trap

Executive summary

Concentrated equity positions destroy more wealth than any other preservation failure. Diversification is the highest-leverage preservation tool.

• Single-position > 10% of NW = active risk
• 10b5-1 plans for executives
• Exchange funds for low-basis positions

Key takeaways

• Single-position > 10% of NW = active risk
• 10b5-1 plans for executives
• Exchange funds for low-basis positions
• Hedging via collars where appropriate

Key strategies

1. Strategy 1

   Single-position > 10% of NW = active risk

2. Strategy 2

   10b5-1 plans for executives

3. Strategy 3

   Exchange funds for low-basis positions

4. Strategy 4

   Hedging via collars where appropriate

Pro-tips checklist

• Diversify in scheduled batches, not all at once
• Tax-loss harvest annually

FAQ