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Diversification and the Risks of Concentrated Stock
When individuals find themselves with a large concentrated stock position due to working at a company like Nvidia, there is inherent pressure to stay invested. However, it is crucial to exercise stock options, sell, and diversify once a significant portion of net worth is tied to one asset. Diversification is essential to avoid potential wealth loss and mitigate risks associated with a single company's performance, even if the company, like Nvidia, is experiencing significant growth. Market conditions can quickly change, impacting stock valuations and necessitating proactive diversification strategies to protect wealth.