The risks and rewards of a concentrated stock position.
We wrote our first concentrated stock research paper in 2004 and completed version 2.0 in 2021. The plan was to wait until 2024 for version 3.0, but a confluence of recent market and economic factors drove this team to update it now. In the new version, we look at 40 years of stock performance—including recent market events—and the risks and rewards of concentration. One thing is constant: while concentrated stock positions can create substantial wealth, there is also a high probability of dramatic losses that have the potential to derail the financial future you had envisioned for you and your family.
