Apple stock fell 14% last month. More importantly, in the last year, Apple’s stock has dropped by over a quarter. I don’t really care why. I do own Apple stock, but only as part of my Vanguard Total Stock Market Index fund, so the impact to my portfolio from this one stock was very small. But I bet you there are a lot of Apple aficionados, many of whom are also Apple employees, who are feeling it a lot more than I am.

This is a story that happens not just to Apple, but to lots of tech companies: a once “sure thing” turns sour. Maybe just for a day or month, or maybe for years. Who can tell at this point? The stock market as a whole has historically gone up, but individual stocks have a much less reliable history. Concentrating your investment portfolio in one stock is a risk. If you also happen to be employed by that company, you’ve just doubled down on that risk.

If you work at a company and have your money invested broadly through the US and international stock markets, then if something dire happens to that company, probably the worst that happens to you is that you lose your job. Bad enough, of course, but not nearly as bad as losing your job and seeing you 401(k) or investment account drop in half (or worse). (Enron will be the poster child for that failure mode for a long time to come.) Because high tech is one of the more volatile industries to work in, the point is even more important to consider.

And what happens if you also own a home in a real estate market whose valuations are heavily dependent on the tech sector continuing to thrive? I’m looking at you, San Francisco Bay Area and Seattle (and probably others…but I only have two eyes). Now, potentially, your income, your investment portfolio, and your house valuation all depend, more or less, on the same factors.

“But my company…it’s so awesome.”

Especially in the tech sector, where it seems everyone is doing something cool, making a novel new product, upending previous technology regimes, we tend to get really wrapped up in our companies, their prospects…their stock’s prospects. I’ve worked with clients at Google who had almost half of their substantial net worth tied up in Google stock and stock options. The clients didn’t want to reduce their holdings because the stock had served them well in the past and they had a good feeling about it. It’s not a new story, nor is it unreasonable to feel this way. As of now, that persistence has paid off, and who knows when (or if!) it’ll turn sour. I can’t predict the whole stock market, let alone a single stock. But, frankly, it makes me nervous. The upside would be lovely, but the potential downside of this concentration (investment portfolio, job, home value) is devastating.

Of course, I don’t recommend reacting to daily, weekly, or even monthly changes in a stock or stock market. That’s a loser’s game. But even if you can keep your mitts off your portfolio, it’s still going to be paaaaainful to watch a good chunk of it evaporate, hoping hoping hoping that it’ll come back. And there is no guarantee that it will come back: you have a much better chance of the entire market rebounding than of any one specific stock doing so.

So, ask yourself: What is more important to you? Leaving open the possibility of the potential upside of a concentrated position in your company stock? Or closing the door on the devastating downside? I know my answer. But what is yours?

If you are interested in learning about how I can help you evaluate your employer-stock portfolio, and tailor it to you and your goals, please contact me at meg@flowfp.com or schedule a free 30-minute consultation.