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I'm assuming 10% of your IRA is in JPM and not 10% of JPM's outstanding shares?
If 10% of your IRA is in one stock, are you concerned you might be slightly over weighted here? Basically it violates the 2% rule of not risking more than 2% of your account value on any one trade we advise traders to use.
I personally think putting more weight in a very well considered investment in its sector is better than scattering it out in tiny increments without much thought is a better method. Otherwise just buy an ETF. There's nothing wrong with loading up on something you think is a sure thing but who knows what a sure thing is these days? Wait...I do know one....banks getting bailout after bailout.....seems to be working.
Simplicity is the ultimate sophistication, Leonardo da Vinci
Most people chose unhappiness over uncertainty, Tim Ferris
Yes, it is overweighted. My IRA is tiny. When I went thru my divorce a few years ago, I had to cash out my 401k. After I quit my day job and changed my life, I never started saving in a retirement fund again until this year. The priority was paying off my two houses instead first, and my savings was really just paying down my two mortgages (the only debt I had).
So at tax time, I funded 5k from tax year 2011, and another 5k for tax year 2012 [the max you can do], so my IRA is very small right now.
The problem with a small IRA is the fees can kill. I am with optionsXpress, and it's $8.95 a side. Insane for a small account. So I am not well diversified.
I do agree with your analysis, and you are absolutely right.
My IRA is also hedged with an UltraShort SP500 position. All of my holdings are with companies that pay nice dividends, that is the primary strategy in this IRA - risk neutral + dividends growth.
