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It’s loosely defined as holding a significant portion of wealth in a single stock, which could result in an inappropriately diversified portfolio. For some, concentration risk might mean holding any amount of a single stock position in a company they work for. Ultimately, concentration risk is a magnified risk/reward tradeoff.
The Thought Process: Again, at some point, it often makes good sense to sell some of your company equity (which exposes you to single-holding risk) and direct the proceeds into a diversified portfolio. But for the entire portion you plan to invest long-term, we believe sooner is better. Your plans can then drive your tactics.
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