It is a stressful time in many ways. Markets are down, prices are up for things you need to buy, talk of recession is looming. It is understandable if you are stressed out about what is happening right now in your portfolio, but there is a better mindset that can keep you from making any big mistakes.

The stock market “officially” became a bear market this week, defined as a 20% decline in the S&P 500 Index. Our regular readers know that we have already been in a bear market for some time. High flying tech stocks and the Russell 2000 Index of small company stocks both peaked February 2021, sixteen months ago as of this writing. Much of the remainder of the market peaked in November 2021.

Mistakes are a part of life. We all make them and hey, no shame, no blame. But it is important to understand how you handle the consequences of mistakes, and what can you learn from them. If we can do some of the learning for you, before you suffer a financial setback, even better.

What if the source of your wealth creation became the biggest risk to your wealth preservation? Well, many successful entrepreneurs and executives find themselves in this exact position. If you have built wealth from equity-based compensation, you likely have a large amount of your net worth tied up in low-cost basis stock or company options. You also may have motives – good and bad – why you want to hold on to such a concentrated investment. Here are some reasons why it makes sense to diversify your portfolio, and common ways to do so strategically.