Early Retirement Extreme Forums

Pretty much the subject title. Arguments for being that you understand an industry you work in more so you can better pick out value. Arguments against being that you put too many eggs in one basket. Thoughts?

Yes, but I am a passive investor and do so via total market index funds. So I think in the sense you meant, no, I don't pick stocks in my industry.

My inclination is believe that overdoing it in a work sector leads to too much concentration of risk for my comfort level..

No, partly because it concentrates risk as ID said, and partly because I think it can give a false sense of 'knowing' your industry and lead people astray. Someone working for Oracle may have an informed opinion of Cisco or SAP, but that doesn't mean they know any more about TI or FB than the average investor.

I have some investments in the industry I work for, but it's not overweight.
I just happen to own a couple food companies that I bough when I thought they were a good deal and never sold them.
Plus any food company I have in the indexes.

Only passively via mutal funds.

Aren't you dancing on the fine line of insider trading, if you start actively investing in your industry, especially companies you work with or for?

Not really. I can't invest in my own company during quarterly earning sessions but other than that I'm free and clear. Everything I do for clients ends up in the public database. This is oil & gas specific, however. I know my buddy working for a bank has much tighter regulation. For example, he is stuck owning a company until they cease being a client of his.

Just through an ESOP (employee stock ownership plan) that is no cost to me. Not many publicly traded companies in my field though, and I only own one other individual stock in my portfolio, so I don't see me buying another out of the few that exist.

I have done, when a company seemed particularly well-managed, and inside the industry sometimes this is clear. Of course it's easier to a company that is badly-managed, and there are more of that kind, but such investments would only be a small part of my portfolio. In general, I go with the Lincolnshire version of the efficient market hypothesis: the person you are buying from knows as much or more than you about the stock you are buying. This limits my enthusiasm to get into the 'next best thing'.

No. Print is dead.

...

When I worked... no, because local government bonds were not a prime investment vehicle for me.

Yes.

1) I've worked for a handful of startups. So far, no big wins. In fact, the one that was very hot fizzled, did a reverse split at a much lower valuation, etc. I suspect I've lost my money on that one. I now don't really look at employee equity in startups to have value. This could be a huge rant but when your grant is, at that stage of the company, some small fractional percentage of ownership, it's not going to change your life if the company hits it big. Ownership really only means something when it is significant. I went to Silicon Valley very skeptical of venture capital and I left even more skeptical. I think bootstrapping is much more sensible so that is what I'm more interested in and focused on.

2) I've tried to practice investing and, working in tech, a lot of hot stocks are in tech. Overall, I'm not that great an investor. So I only dabble with a small amount of money. I plan one day to go through the books Jakob recommends for investing and try to practice it in earnest but I'm too distracted with bootstrapping a business while working a day job to give it the effort/time it deserves.

So I think the answer is yes but not seriously. For now, the majority of my savings is in mutual funds.