Hard to imagine we are embarking on the holiday season and Toys-R-Us is no more. How a company that sells toys in an overindulgent society could fail is a question for another day. Rather, TRU is a reminder of the dangers of concentration. Investors have all manner of excuses for concentrated positions: The stock has always been good to me---My Dad said never sell it---The company is diversified-so it’s like an index fund--- I’ll have to pay capital gains---Once the value reaches “X” I’ll sell some, etc. etc. etc. And my personal favorite- “I work at the company so I know what’s going on.” To which I respond, “So, your portfolio, retirement, and livelihood are all concentrated in one bucket?” Here’s a great question for investors ignoring the dangers of concentration: “If this stock rose 50% would your life change, conversely if it dropped 50% how significantly would your life change. Bear Sen$e MarkAlanGriffis.com
