For someone who has always focused on diversification, I've gotten in deep with my latest venture. Before 2023, I fancied myself as quite the diversified investor, with most of my portfolio spread across ETFs, Tech stocks, Real-Estate, and Crypto. On paper, it looked responsible. I slept well.
Then in 2023, I made a big life change, relocated, and decided to go all-in on building a company. My third. Fast forward to today, and my personal balance sheet looks completely different.
What used to be a \~$300k diversified portfolio is now mostly concentrated in one asset: my ownership equity in an operating fintech company. On paper, that stake is worth more than my old portfolio ever was (>$3m). In reality, my liquid position is now under 3% compared to 40% before my move. This bothers me.
From one angle, this looks like rational concentration - founders are supposed to be concentrated in their highest-conviction asset right?. From another angle, it feels like I’ve traded financial resilience for theoretical upside. I’m “wealthier” on paper, but functionally much poorer in cash.
So I’m curious how others here think about this from a pure investing perspective:
• At what point does concentration in your own business stop being conviction and start being bad portfolio management?
• How do you think about liquidity risk vs expected value when the asset is illiquid?
• For those who’ve been through this, what did you wish you’d done earlier to rebalance or protect downside?
Not looking for validation, genuinely interested in how others frame this trade-off. Am I overthinking it?