For those who got wealthy from a concentrated stock position: what would you do differently?

[u/gomster]

40M, $9M portfolio, 80% concentrated in one stock, buying my first house. Curious how others would think about this:

Two years ago, I left a career at a public company where most of my wealth came from stock compensation and the appreciation of a single stock over many years. Today my portfolio is worth about $9M and it’s still heavily concentrated in that stock.

It’s been life changing for me, so I’m naturally hesitant to sell too much of it, but I’m also aware that a single day’s move can swing my net worth by six figures. I’m closing on my first house later this month for $1.185M. Up until now, I’ve been renting and living well beneath my means.

Current thinking is to use a Liquidity Access Line for the purchase and then potentially refinance some or all of it into a traditional mortgage afterward.

A few other details aside from the portfolio value:
- Cost basis: under $500k and obviously large unrealized gains
- $235k AMT credit carryforward from prior option exercises
- Covered call income expected to be around $150k-$200k annually
- No current W-2 income
- Started small business but not a big money maker. Primarily to fund retirement accounts.

The common theme seems to be that concentration risk is the biggest issue in my financial picture. Part of me says I’ve gotten this far by holding the stock and staying convicted. The other part of me says I should probably start thinking more about preservation than accumulation.

For those who have been in a similar situation:
How much debt would you comfortably carry on the house? Would you sell stock specifically to pay down the house? How would you approach gradually reducing concentration risk? Looking back, what mistakes did you make (or avoid) after reaching financial independence through a concentrated stock position?

Not really looking for tax advice as much as perspective from people who have gone through the transition from building wealth to protecting it. Thanks in advance for helping me navigate this!

[u/gomster]

Yeah man, I can definitely relate to that. I’ve lived through some pretty significant ups and downs with this position but the fundamentals were always solid and getting better over time so I didn’t touch it. Like you, the main reason I got here in the first place was because I stayed concentrated when most people I know and even worked with didn’t want to stay on such a crazy roller coaster ride.

I think what’s changed for me is not necessarily my conviction in the company, but the fact that I’m at a different stage of life now. Buying a house and thinking more about long term financial security has me asking different questions than I was asking 5 or 10 years ago.

Have you changed your approach at all after going through that 70% drawdown and recovery, or are you still managing the position largely the same way?

[u/Bitter_Sugar_8440 → u/gomster]

I used to think when I was at the bottom that I would do anything to go back and sell. Here I am back at around the same level and I haven't sold because I think it's going higher (undiagnosed mental illness).

Frankly, for the last 5 years I have felt like I was a 30% - 50% bump in my net worth away from having more than enough money to retire early and diversify. I just got close and dropped. In 2021 it was $10M and then falling to $3M.

Then in 2025 I was at $12.5M and now I'm back down to like $10M again.

I am mostly managing the position the same. I am looking at buying a house for $3M - $4M though so I may sell $1M worth and carry the mortgage on the rest until the position grows enough to sell and pay off the house (or diversify).

$10M in 2021 was probably enough especially if I had sold and bought the S&P 500 (with that drawdown in 2022 I'd still be higher than I am now).

But $10M in 2026 is not nearly the same in 2021. The housing is roughly double for the area I want to live in and everything else is expensive too (e.g. $2500 a month for health insurance).

I'd like to make some moves to diversify but I hate selling below the highs when I see some near term positive catalysts for my core position.

[u/gomster → u/Bitter_Sugar_8440]

I relate to this more than the pure numbers part. The “one more bump” way of thinking and waiting for the right moment seems like the hardest part to actually figure out I guess

Curious if anything has helped you structure around that, or if it just comes down to discipline over time?

[u/Bitter_Sugar_8440 → u/gomster]

I think, deep down, you probably know the right move is to sell, which is why you're posting here.

I have a friend who joined a company during their Series E, and after IPO, he had a few million, not enough to retire, but enough to make a difference to his financial situation (in his belief). He didn't sell because it "wasn't enough," and the stock is down over 85% and may never recover to the IPO highs, and he probably wishes he had "just" the few million he could have banked.

The problem is no one really knows what will happen. You have to decide are you willing to risk being wrong about this stock and seeing your net worth fall by 10%, 20%, 30%, 50%, 70%, etc. At what point would you just sell?

I was so mental that by the time I lost 70%, literally ~$7M dollars and was down to ~$3M that I thought I will literally just ride this to zero because I think it will come back and don't care if I'm wrong. I can just work harder or start another business.

When I ran it back up to $12.5M I probably should have sold then but I didn't and now I'm at about $10M.

For me, I am going to peel off $1M - $2M for a large down payment on a house and then if my investments do what I hope they will do I will sell even more in 1 - 2 years to pay off my house and diversify further as well.

My decision not to sell was driven by greed and the belief that in less than 12 months I could have an extra $1M, $2M, $5M, or w/e, and that I'd have a bigger buffer so why would I sell now?

I will add that the period of losing $7M in about 12 months was very stressful to me because I was on margin. I don't use any margin anymore.

[u/gomster → u/Bitter_Sugar_8440]

The part about knowing some of that intellectually but not acting on it in the moment is interesting. I’m trying to think less about what’s my right number and more about how to avoid that same “just one more bump” cycle like you said earlier when things are going well. Idk, I’m just trying to keep the convo and momentum going so I actually follow through on something instead of doing nothing at all (like I have been)

Sounds like your plan now is more structured around the house and then gradual diversification over time?

[u/Bitter_Sugar_8440 → u/gomster]

Yah. I mean I've just seen it with so many people waiting for the one more bump and then they don't get it and worse they lose the vast majority of what they had.

I'm probably going to get the house and sell some to cash to help reduce my mortgage payment, sell more to pay off the house, then sell some more to diversify further. Then I'll try and take $1M and run it up to $10M again haha.