Over Concentration

Alabama, Georgia, Florida

Importance of Diversification
Diversifying your portfolio helps creates a buffer during sharp upswings and downswings. By placing investments in different sectors instead of a single one, your risk is better controlled. The likelihood that all the sectors in your diverse portfolio will suffer losses is far less than the possibility of one suffering a giant loss. Brokers are therefore obligated to advise their clients to diversify in order to decrease risk.

While it may sacrifice a portion of the upswing potential, diversification is offset by the low-risk benefits it produces. A broker who overconcentrates your account can be held liable if that investment declines in value or if you lose money.

For example, if your portfolio is heavily weighted in technology stocks and those stocks severely decline, you may be able to collect compensation because your broker should have diversified your risk. Many investors suffered serious losses after the Internet stock bubble collapse because their brokers concentrated much of their stock in speculative Internet investments.

Goal-driven Investments
Every investor is different, and so is each of your goals. Therefore, your broker must implement careful strategies to your portfolio. Your appropriate amount of diversification depends on your financial position, investment goals, level of risk you're comfortable taking and how well the market is performing.

over concentration claims are some of the most common, yet difficult claims to prove. Brokers often argue that under the certain circumstances, the investments made suited your portfolio and aligned with your investment objectives.

Single Investment Warning Signs
If your account contains only one individual investment, over concentration is easier to identify. Your account may also be overconcentrated if it contains only common stocks, such as mutual funds that invest in common stocks, instead of a blend of common stocks, preferred stocks, and bonds. Another warning sign is if your account contains investments that are restricted to one type of industry or industry sector, like finance.

If you or a loved one has suffered financial losses and you believe your broker or brokerage firm overconcentrated your account, contact the securities fraud lawyers at Burke, Harvey & Frankowski. Dedicated to the residents of Florida, Georgia and Alabama, our experienced attorneys can help you understand your rights help you recover your losses. Call or e-mail us today for a free consultation.

Sitemap

Home
About

Alabama Rules of professional conduct require the following notice: No representation is made that the quality of legal services to be performed is greater than the quality of legal services to be performed by other lawyers.

The information presented on this website for Burke, Harvey & Frankowski, LLC., should not be taken as formal legal advice including reference to Auto Accidents, Truck Accidents, Product Liability, Medical Malpractice, Motorcycle Accidents, Nursing Home Negligence, Personal Injury and/or Personal Injury Attorneys. Serving Birmingham, Alabama, Florida, Georgia and Tennessee. If you or a loved one have been injured, contact us to schedule a consultation with a Alabama personal injury lawyer to see if you have a claim.