The S&P 500 just printed another all-time high. Nvidia has returned more than 60% over the trailing twelve months — more than double the S&P. For families who held the right names through this run, the result is a familiar problem: a single position has quietly become the largest thing on the balance sheet — sometimes 15%, 25%, even 40% of total net worth. The portfolio looks great on paper. The risk underneath it doesn’t.
Concentration is one of those problems most people know they have and almost no one solves. The reasons are predictable: the position has appreciated so much that selling triggers a meaningful tax bill, the stock keeps working so the urgency feels low, and the available alternatives each carry their own friction. So nothing happens, and the position keeps growing.
The right framing isn’t “should I sell.” The right framing is what level of single-stock exposure is acceptable given the rest of the plan, and what the most tax-efficient path to that level looks like. For a family with most of their net worth outside this position, a 15% allocation may be fine to live with. For a family where it represents the bulk of liquid assets, the answer is different. The decision starts with the balance sheet, not the chart.
Once the target is defined, the tools are well understood and not all of them require selling. A 10b5-1 plan creates a disciplined, pre-scheduled trimming schedule that spreads gains across tax years. A protective collar — buying a put and selling a call against the position — defines the worst-case outcome without realizing the gain. An exchange fund swaps the single name for a diversified pool while deferring tax, though it requires a multi-year lockup and typically a $5M minimum. For charitably inclined families, gifting appreciated shares to a donor-advised fund or charitable remainder trust eliminates the embedded gain entirely on the gifted portion. Each tool fits a different situation; none is universal.
One thing worth adding: the longer the position has worked, the harder this conversation gets. The right time to plan around concentration is when the stock is up and you don’t need to do anything urgent. By the time the position is down and the decision feels forced, the optionality is gone.
If a single position has grown into the largest item on your balance sheet, the question worth asking isn’t whether to act, but what the framework for acting looks like.
For informational and educational purposes only. Not investment, tax, or legal advice. Strategies and tools described herein may not be suitable for all investors and may involve risks not fully described in this post. Lake Hills Wealth Management is a Registered Investment Advisor registered with the Securities and Exchange Commission. Registration as an investment adviser does not imply a certain level of skill or training. Our current Form ADV, Part 2A is available at adviserinfo.sec.gov.