By Shaw Pritchett, President and Financial Advisor at Jackson Thornton Wealth Management
A few weeks ago, I found myself in the middle of a round of golf when a conversation stopped me in my tracks — not because of anything on the course, but because of a story I heard from a fellow competitor.
He worked in aviation sales, but that wasn’t always his world. For years, he had been exactly where many of you are: building wealth, managing a book of business in financial services, and working toward a future he had carefully planned. By age 40, he had done it. He retired — living off the dividends from a concentrated portfolio built around two names he knew well: Citigroup and Bank of America. This was 2007. I imagine you already know where this is going.
When Confidence Becomes Concentration Risk
The Global Financial Crisis didn’t just rattle markets — it rewired how an entire generation thinks about money. Between October 2007 and March 2009, U.S. stock indexes fell more than 40%. But for investors concentrated in bank stocks, the damage was far worse.
Bank of America fell from nearly $48 per share to under $7 — a decline of roughly 86%. Citigroup dropped from around $419 to just over $25 — a loss of nearly 94%. And the dividends he had planned to live on? Both fell to just a penny per share. He spent the years that followed doing whatever work he could find, piecing together an income while rebuilding from scratch.
It’s a story that’s hard to hear. And it stayed with me long after I walked off the 18th hole.
The Missed Safety Net
This outcome wasn’t inevitable. Had that same portfolio been invested in a diversified fund tracking the S&P 500, the downturn still would have hurt — a 53% decline at the bottom is painful by any measure. But the recovery would have told a completely different story. From that same starting point, a broadly diversified S&P 500 portfolio would have grown by more than 340% over the years that followed.
That’s the difference between rebuilding a life and living the one you planned.
Diversification: Still the Only Free Lunch
Diversification doesn’t eliminate risk — nothing does. What it does is prevent any single company, sector, or event from taking everything. Concentration risk is one of the most common vulnerabilities we see: a business owner with most of their net worth in a single company, an executive heavily weighted in employer stock, a retiree trusting a handful of familiar names. Familiarity can make concentration feel safe. History suggests otherwise.
Before we parted ways, my golf companion gave me his blessing to share his story. At Jackson Thornton Wealth Management, it’s exactly the kind of conversation we welcome. Whether you’re approaching retirement, navigating a business transition, or simply wondering if your portfolio is as protected as it should be — we’d love to talk.
The best time to think about diversification isn’t after a crisis. It’s now.
Reach out to the team at Jackson Thornton Wealth Management to start the conversation.
Past performance is not indicative of future results. This article is for informational purposes only and does not constitute investment advice. Please consult with a qualified financial advisor before making investment decisions.
Shaw Pritchett, President & Financial Advisor
Jackson Thornton Wealth Management
[email protected]
334.240.3679
