Portfolio and Account Analysis
Chapters in this video
- 0:00 Meet Carla's 100 spatula-stock portfolio
- 1:12 Diversification and the systematic risk trap
- 2:35 Strategic vs. tactical allocation and rebalancing
- 4:42 Concentration risk and four ways to unwind it
- 6:30 Standard deviation vs. beta
- 7:09 Tax ramifications and the $3,000 loss deduction
- 8:16 Rapid-fire exam recap
What this video covers
- Why diversification reduces unsystematic (company-specific) risk but cannot eliminate systematic (market) risk
- The difference between strategic asset allocation (long-term target, periodically rebalanced) and tactical asset allocation (short-term active deviation)
- Why rebalancing in a non-qualified account triggers capital gains, while rebalancing inside an Individual Retirement Account (IRA) or 401(k) avoids current taxes
- How to identify concentration risk and the four common strategies to reduce it: gradual sales, protective puts, charitable gifting of appreciated shares, and exchange funds
- Why a representative still must document the concentration conversation even when the customer refuses to sell
- The exam distinction between standard deviation (total risk) and beta (systematic risk only)
- The $3,000 annual cap on net capital losses deductible against ordinary income, and why tax considerations inform but never override suitability
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