The Risk of (Individual) Stocks

A lot of investors hold concentrated positions in individual stocks. This can happen when you hear Charlie Munger say that “diversification is for the know-nothing investor” without realizing that he’s talking about you, or for other reasons like being part of a company that went public and holding onto your stock, or owning stock in an employer that has performed so well that it becomes a large part of your portfolio. In any case, I don’t think people are aware of how risky individual stocks are.
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*References* https://zbib.org/7c056de3584a4b50b790b7f401121f60

*Video Chapters*
0:58 Main Content
2:49 Individual Stock Returns
6:27 Why People Own Individual Stocks
8:48 Do Stocks Outperform Treasury Bills?
10:09 Underperformance of Concentrated Stock Positions
13:54 How Many Stocks Should You Own?
17:04 Barriers to Diversifying Concentrated Positions

*Related Videos*
The Case for Index Funds https://youtu.be/Nv5CiRSCVxA
Picking Stocks https://youtu.be/AecvTErBQY8

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