How much of my net worth in one stock is too much?

Common practitioner conventions run 5–15% of investable net worth in a single name; this instrument draws its line at 10%, sized so a −50% event costs at most 5% of the pile. Where your line sits is a judgment — the instrument just shows where you stand against one.

What does it cost in tax to diversify a concentrated position?

The excess above your line, times the gain fraction embedded in it, times your capital-gains rate. A $1.2M position with a $300K basis, trimmed back to 10% of a $3M pile at a 25% rate, owes roughly $169K — the exact figure prints above for your inputs.

What is the downside of holding a concentrated position?

Single names halve; broad markets rarely do. The stress table prices a −50%, −35% and −20% year in your position in money and as a share of net worth — often several times the tax bill that trimming would have cost.

Concentrated Stock Position — Exposure & Tax to Trim

The manifest — your numbers

Currency symbol display only

The position, at market

Everything tied to the one name — shares, vested options, funds that are really it in costume.

Investable net worth

Liquid and near-liquid holdings including the position. Leave the house out.

Cost basis of the position

What you paid. Sets the embedded gain and the tax bill of trimming.

Capital-gains rate on a sale

Your all-in marginal rate on realised gains, wherever you're taxed.

What is it, honestly?

Sets the drawdown the stress line assumes: −50% single name, −35% sector, −20% broad index.

Nothing you type leaves this page. The instrument runs entirely in your browser; there is no account and no record.

The reading

Far above the line.

40%

of investable net worth riding in one name

The exposure ledger

Concentration — the position over the pile	—
The house line	—
Riding above the line	—
Embedded gain in the position	—
Tax bill to return to the line	—

Three bad years in that name

If it fell	You'd give back	Of your net worth
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What moves this result

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What would sink this reading

Correlation hides here. If your salary, options and pension ride the same name as the position, your true concentration is higher than the number above.

Lock-ups, blackout windows and restricted stock can make the tax bill the smaller obstacle. Arithmetic can't see a trading window.

Concentration built the pile — every great fortune violated this line on the way up. The line is about keeping fortunes, which is a different sport from making them.

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Questions people bring to this desk

How much of my net worth in one stock is too much?: Common practitioner conventions run 5–15% of investable net worth in a single name; this instrument draws its line at 10%, sized so a −50% event costs at most 5% of the pile. Where your line sits is a judgment — the instrument just shows where you stand against one.
What does it cost in tax to diversify a concentrated position?: The excess above your line, times the gain fraction embedded in it, times your capital-gains rate. A $1.2M position with a $300K basis, trimmed back to 10% of a $3M pile at a 25% rate, owes roughly $169K — the exact figure prints above for your inputs.
What is the downside of holding a concentrated position?: Single names halve; broad markets rarely do. The stress table prices a −50%, −35% and −20% year in your position in money and as a share of net worth — often several times the tax bill that trimming would have cost.

Methodology — the formula, printed

Everything below is calculated from your inputs. Nothing is fetched, no market data is used, and no recommendation is produced.

concentration = position / net_worth
excess        = max(position − 10%·net_worth, 0)
gain_fraction = max(position − basis, 0) / position
tax_to_line   = excess × gain_fraction × tax_rate
stress        = position × drawdown   (−50% / −35% / −20%)

The house line sits at 10% of investable net worth in any single name — a common practitioner convention, chosen here so that a −50% event in the position costs at most 5% of the pile. It is a convention, not advice; some houses run 5%, some 15%.

Limitations. Staged sales across tax years, hedging with options or collars, exchange funds and charitable routes can all change the tax figure materially — and are exactly the conversation to have with an adviser, holding this page's numbers.

Concentrated Position: Trim or Hold