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.

After a three-year rally, the S&P entered correction territory (down over 10%) in late January, marking the worst slide since 2020. The selloff has been especially extreme in many previously high-flying tech stocks. Over 70% of stocks in the NASDAQ index are down more than 20%, and the average stock in the tech-focused index is down 40%.