Former financial advisor Richard Demetriou is currently involved in a legal dispute with a customer who alleges that Demetriou overconcentrated the customer’s portfolio in Real Estate Investment Trusts (REITs). Last year, Demetriou was sanctioned by the Financial Industry Regulatory Authority based on the regulator’s findings that Demetriou “made false or misleading misrepresentations of fact in widely distributed emails to current and former customers.” Demetriou was associated with the brokerage firm Titan Securities from 2009 to 2021.
Excessive Concentration
The benefits of diversifying are well established and have been explained by FINRA as follows:
Asset Allocation. By including different asset classes in your portfolio (for example stocks, bonds, real estate and cash), you increase the probability that some of your investments will provide satisfactory returns even if others are flat or losing value. Put another way, you’re reducing the risk of major losses that can result from over-emphasizing a single asset class, however resilient you might expect that class to be.
Diversification. When you diversify, you divide the money you’ve allocated to a particular asset class, such as stocks, among various categories of investments that belong to that asset class. Diversification, with its emphasis on variety, allows you to spread your assets around. In short, you don’t put all your investment eggs in one basket.