By Jillian Baker
Investors holding large concentrated stock positions often present a challenge for advisors. While many understand the heightened risk and need for diversification, the low-cost basis and resulting tax consequences of liquidation complicate the process. But what if there was a way to add value and help manage risk while calculating a structured shift to hedged diversification?
ZEGA Financials’ Jay Pestrichelli joins Derek Moore to discuss how risky single stocks are and how we have a system to hedge that risk. Some people want to hold concentrated stock positions due to tax consequences and are reticent to sell. Many people might be surprised how often single stocks sell off significantly. See how using a hedging strategy can help manage risk, schedule diversification, and use hedging profits to buy more shares otherwise known as the hedger’s opportunity. See the show notes below for links discussed in episode and other Jay and Derek episodes.
Jay and Derek also discuss that once again the market is within 3% of an all-time high. Something they discussed on a previous podcast. Don’t forget to sign up to receive email notifications when ZEGA posts something new as the upcoming White Paper on Solving for Low Cost Basis Concentrated Stock Positions will be released soon.
- What is concentrated single stock risk?
- How much more risk is holding just one stock compared to a diversified portfolio?
- How do people wind up with large concentrated stock positions?
- How can direct hedges mitigate downside risk?
- Why covered calls are not a hedge
- What is the hedgers opportunity?
- Irrational decisions at market bottoms and tops
- Markets are near all-time highs more often than you think
- Despite impressive historical returns Apple stock has experienced huge drawdowns
- How hedging single stock risk can solve problems for advisors and investors
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