Definition
What is a concentrated stock position?
A concentrated stock position is when a large share of your net worth is tied up in a single stock — often from company equity compensation, a long-held investment, or an inheritance. The concentration creates outsized risk, because your financial security depends heavily on one company’s performance.
Concentration often comes with an embedded tax problem: selling to diversify can trigger a large capital-gains bill, which is why many people hold on longer than they should.
A thoughtful strategy reduces the risk over time in a tax-aware way — using techniques like staged selling, tax-loss harvesting elsewhere in the portfolio, charitable gifting of appreciated shares, and coordination with your overall tax plan.
This definition is for educational purposes only and does not constitute investment, tax, or legal advice. Rules and thresholds change; consult a qualified professional about your situation.