The Law Offices of Patrick R. Mahoney, P.C. is investigating accounts that are over-concentrated in the oil and gas sector. In the first ten days of March, oil prices fell more than 30 percent. On March 9, 2020, oil’s drop represented the largest single-day move since 1991 during the first Gulf War.
Investors who have too much exposure to the oil gas sector could be at risk of suffering unnecessary losses.
Economist Harry Markowitz received the Nobel Price in Economic sciences for his development of the Modern Portfolio Theory. Modern Portfolio Theory endeavors to maximize returns through diversification of asset classes. According to Modern Portfolio Theory, if an investor holds combinations of investments that are not perfectly correlated, they reduce their overall portfolio risk. For example, a portfolio should contain investments in diversified assets classes such that if one asset class falls in value due to market conditions, another asset class should rise equivalently due to those same market conditions. Conversely, according to Mordern Portfolio Theory, if a portfolio does not contain investments in diversified asset classes, or is over-concentrated in one asset class, a fall in value of the over-concentrated asset class disproportionately subjects the portfolio to unnecessary risk.
If you are an investor that was over-concentrated in oil and gas related securities, you should consider discussing the issue with competent legal counsel. If you would like to discuss your situation and potential for recovery of any investment losses, please contact us for an evaluation of your potential case.