Joe Occhipinti
Wealth Advisor
Warren Street Wealth Advisors
If you are a holder of Edison International Stock, then I am sure you have already heard the news. Yesterday, December 5th, 2017, the stock had fell 12.78% due to the Thomas Wildfires and news of institutional selling.
Why Utility Stock Edison International is Plunging Today
Stifel Financial Corp Reduces Stake in Edison International
Litzinger Sells 224,718 Shares of Edison International Stock
The Biggest Loser: Edison International Tumbles 13%
EIX stock across recent trading days
As I write this, the stock currently sits at $68.44 a share marking a 14.71% decrease across a little more than a day of trading. Edison International stockholders are definitely feeling the impact.
However, this isn’t the first time a utility company has been hurt from events outside of their control. This is a similar story for PG&E, a northern California power company whose stock also got hammered 20% due to the catastrophic Sonoma County fires back in October and has still yet to recover.
PCG stock during Sonoma County wildfires
In hindsight, how do you prevent an instance like this from drastically impacting your retirement?
Diversify, diversify, diversify….
This is one of the dangers of holding a large position in your company’s stock or any single security. It can take one incident, that is typically outside of our control, to put the hurt on stock prices and cause a significant loss in retirement assets.
Remember deregulation? Today it’s wildfires, what could the next one be?
We share with clients that owning many different types of assets can protect you from a single devastating loss like this. We preach diversification even harder for those close to retirement because, unfortunately, a significant loss like this can cause a huge setback.
In addition to the loss, the next question becomes: how long will it take for the stock to recover to previous levels? If you look back to the deregulation event, about 4 years before the stock recovered to previous levels.
EIX stock during deregulation
Or what about a global recession? Edison’s stock fell nearly in half and took 5 years before it fully recovered.
EIX stock during global recession
We are not saying that the recovery won’t happen, we just showed you two instances of stocks returning to previous prices. The question is how long will the recovery take, what to do now, and steps you should take to prevent a wildfire from postponing your retirement.
PCG & EIX stock in recent months
Do you own a significant amount of EIX stock in your 401(k)? Want to figure out if this set your retirement back?
Contact us for a free consultation to see if you are still on track to retire and find ways to reduce these types of risks in your investments.
Joe Occhipinti is an Investment Advisor Representative of Warren Street Wealth Advisors, a Registered Investment Advisor. The content herein is for informational pruposes and is not meant as personal or actionable advice to any individual, corporation, or other entity. Any investments discussed carry unique risks and should be carefully considered and reviewed by you and your financial professional. Diversification does not guarantee profit or protection against loss in declining markets. Nothing in this commentary is a solicitation to buy, or sell, any securities, or an attempt to furnish personal investment advice. We may hold securities referenced in the blog and due to the static nature of content, those securities held may change over time and trades may be contrary to outdated posts.
