Apr 24, 2022
Derek Moore explains that drops like Netflix this week are not that rare in single stocks. There are tons of examples, especially around earnings releases. Why do people have concentrated portfolios? Diversification vs. single stocks. Problems with selling low-cost basis stocks. How to hedge large, concentrated positions.
What caused Netflix to drop 35% after earnings?
The risk inherent in holding large, concentrated positions in stocks
Reasons investors hold concentrated stock positions
Low-cost basis concentration reasons versus the YOLO (You Only Live Once) crowd
Examining why investment advisors haven’t been able to offer value for concentrated low basis shares
The numbers don’t lie when it comes to standard deviation and risk compared to markets
Examples of past single day drops after earnings
Surprisingly, many stocks are down 40% or 50% from all-time highs
Single stock risk versus market risk
When diversification on its own failed
Why diversification plus hedging works
Mentioned in this Episode:
Contact Derek Moore derek.moore@zegafinancial.com
Derek Moore’s Book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547?ref_=nav_signin&
White Paper On Hedging Low Basis Concentrated Stock positions (right hand side to download) https://zegafinancial.com/products/concentrated-stock