Problems with Concentrated Stock Risk

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How risky is just holding a single stock in a portfolio? Often either through company stock grants or holding company shares for very long periods where it has appreciated investors may wind up holding either a single stock or just a few. This creates single stock risk and has both systematic stock risk and idiosyncratic stock risk. Derek Moore reviews how the volatility via the standard deviation may increase as well as some interesting historical data on Apple stock regarding its annual drawdowns and volatility. What is concentrated stock risk? What is systematic stock market risk? What is idiosyncratic stock risk? Comparing volatility of single stocks to a market portfolio How many stocks does it take to achieve diversification? How does correlation indicate whether diversification will work? Why diversification fails when markets sell off badly Apple's annual compounded growth rate performance 1981 through 2008 Apple annual significant drawdowns Apple stock standard deviation from 1981 through 2018 Mentioned in this Episode: Book: Broken Pie Chart https://amzn.to/31oy1hE Razor Wealth Management www.razorwealth.com Study showing single stock volatility compared to market portfolio http://ppca-inc.com/Articles/DiversByNumbers.pdf

Episode metadata supplied by the publisher feed · Published Aug 11, 2019

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Problems with Concentrated Stock Risk

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