Owning a piece of the company you work for can be one of the most rewarding parts of a career. It aligns you with the people around you, rewards loyalty and lets you share in the success you helped create.
Over time, it can also become the largest risk in your financial life. Stock options, restricted stock units and years of steady gains can leave a meaningful share of your wealth resting on a single company. For many Central Oregon business owners, the same pattern shows up in another form: the business itself. Few stories illustrate the point more clearly than one from our own state.
What Happened to Nike
For years, Nike was the kind of holding that rewarded patience. From 2012 through 2021, the stock had only one negative calendar year, and long-time employees and shareholders had every reason to feel confident.
The stock peaked near $179 in November 2021. By mid-2026 it traded around $40, a decline of roughly 77 percent, and in September 2026 it was removed from the S&P 100 after nearly two decades. Yet revenue in fiscal 2026 was slightly higher than in fiscal 2021. What fell was profitability, with net income dropping from about $5.7 billion to $3.1 billion. A good company can still be a bad concentrated position.
The Risks That Come With One Company
Nike’s decline did not stem from a single event. A 2020 strategy shift toward selling directly to consumers pulled the brand out of many wholesale partners, including specialty running stores, and opened shelf space for competitors. Newer brands such as On and Hoka grew rapidly while Nike’s share of global sports footwear declined. Sales in Greater China fell sharply from their peak. Tariffs on products made largely in Asia pressured margins, and the company spent billions repurchasing its own shares near the 2021 high.
Valuation mattered too. At its peak, the stock traded at roughly 50 times earnings, a price that assumed continued success. Single stocks can also move abruptly. In June 2024, Nike had its worst trading day on record, losing roughly $28 billion in market value in one session.
None of these risks are unique to Nike. Every company faces leadership decisions, competition, supply chain disruptions and shifting consumer tastes. In a diversified portfolio, those setbacks are spread across hundreds of businesses. In a concentrated position, you carry them yourself.
The Risks We Bring to Our Own Portfolios
Some of the most significant risks have less to do with the company and more to do with us. Large unrealized gains make selling feel expensive, so investors hold on while the risk grows. Many anchor to an old high and wait for the stock to return to it. Others feel a sense of loyalty that makes trimming feel like betrayal.
Employer stock adds another layer. If your company struggles, your paycheck, bonus and portfolio can all suffer at once. Business owners face a similar dynamic when nearly all of their net worth is tied to the company they run.
What Diversification Can and Cannot Do
Diversification does not prevent losses. Recessions, interest rate changes, inflation and broad geopolitical shocks affect nearly all stocks, and a diversified portfolio still declines in bear markets.
What it can do is limit the damage any one company can cause. At a market value of roughly $57 billion, Nike represents about one tenth of one percent of the S&P 500. An index investor barely felt its decline. A concentrated holder lost most of the position’s value, and a position that falls 77 percent needs to gain about 335 percent just to break even.
Thoughtful Ways to Reduce Concentration
There are practical ways to unwind a concentrated position over time, including staged sales spread across tax years, gifting appreciated shares to charity or family, exchange funds and option strategies such as collars. Each carries trade-offs involving taxes, costs, liquidity or limits on future upside, and the right approach depends on your goals, tax situation and timeline.
Owning your employer’s stock, or building wealth through a company you started, is not a mistake. Many people build meaningful wealth exactly that way. The goal is to make concentration a deliberate choice rather than an accident of time and success. If you have questions about a concentrated stock position or how your business fits into your broader plan, we would love to have that conversation.
Don Klotter is a Financial Planner and Director of Business Development at True Wealth Group, helping clients plan for long-term financial success and lasting wealth.
Advisory Services offered through Skyliner Wealth, LLC dba True Wealth Group, a registered investment advisor.
