Articles Tagged with overconcentration

Following reports of major airstrikes exchanged between Israel and Iran over the weekend and into this week, oil prices and investments tied to the oil and gas sector have impacted investors by spiking on the theory that the conflict will escalate or impact oil exports from the wider Middle East region. Similarly, since President Trump’s tariffs have gone into and out of (and then back into) effect over the first two quarters of 2025, other investment sectors have experienced wild pricing swings that have also impacted the portfolios of retail investors. Given these seemingly random fluctuations in their portfolios, many investors are left asking, “why are events thousands and thousands of miles away impacting my investment portfolio?” We will help explain.

Now, more than ever, we live in a truly global economy. American companies are deeply intertwined with foreign entities and markets in the same way that foreign entities and markets are inevitably reliant on the United States economy. For example, in the oil and gas sector, although Exxon Mobil produces a considerable amount of crude oil in the United States, the company must still import significant amounts of crude oil from other countries, like Canada, Mexico, and Saudi Arabia, to meet the needs of their operations. If crude oil exports from Saudi Arabia are impacted by the Israel/Iran conflict, one would expect a detrimental impact to Exxon Mobil’s bottom line and stock price due to increased costs from finding new suppliers not impacted by the conflict. If your portfolio has suffered losses due to the recent price swings in crude oil, you should speak with an experienced investment loss attorney, like the ones at Malecki Law in NYC, to determine if your losses are recoverable.

In the context of tariffs, many American companies sell consumer products in the United States but manufacture such products, in whole or in part, in other countries have seen fluctuations in their share prices as the market prices in higher expected future costs due to tariffs. For example, Walmart imports a large portion of consumer goods from foreign countries that it sells domestically in the United States. If tariffs were implemented on the countries from which Walmart imports its goods, Walmart’s financial performance and stock price would be expected to suffer from increased costs. If your portfolio value has decreased on the heels of the recent tariff announcements, your portfolio might be overconcentrated and you should speak with a seasoned securities lawyer, like the ones at Malecki Law in New York.

The investment fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding Raymond James Financial Services broker Joseph Amalfitano of Malvern, PA. According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Amalfitano moved to Raymond James after stints at Citigroup and Merrill Lynch.

Mr. Amalfitano was recently the subject of two customer complaints since 2008, per FINRA records.

According to his BrokerCheck, in 2012, Mr. Amalfitano was alleged to have “maintained an unsuitable concentration of Bank of America stock” in customers’ accounts. Overconcentration can be dangerous since it has the potential to create higher risk and volatility of an account when compared to a more balanced, diversified portfolio. FINRA records indicate this case was settled.

The recent market correction has caused many people to worry about the performance of their securities accounts.  Senior-aged investors (and other conservative investors) are particularly at risk for losses in their accounts if they were inappropriately invested too heavily in equities and other alternative investments.

The Op-Ed published in the Wall Street Journal on August 24, 2015 notes that the low-yield bond environment has enticed some investors to “climb on the bandwagon of rising share prices.”  Brokers may be similarly tempted to recommend risky stocks to their conservative investors, and to recommend concentrated levels of stocks.  However, what may be suitable for a middle-aged investor may not be suitable for an senior-aged investor.

Suitability is an important investor-specific inquiry both the broker and broker-dealer must perform to ensure the investments that are recommended are appropriate given the age, relative wealth, experience and risk tolerance of each investor, among other factors.  A broker’s unsuitable recommendations could be especially problematic for those investors seeking stability and safety of principal, including senior-aged investors who rely on their securities portfolios to generate income.

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