Apple Stock Just Crashed To A New Low

The "technology industry" is too just big and diverse to talk about as a single atomic unit. Hell, even software is too big to treat as a single unit. Don't invest in your specific field (or at least, don't put all of your investments there), but anyone who understands technology is in a better than average position to make smart tech investments.

I think you're missing the point. Yes, if you're willing to "accept risk" then obviously tech can be part of any portfolio.

But the grandparent post was making a point about risk analysis that you seem to have missed. Because we are (presumably) already employed in the tech sector, we are already exposed to risk in that sector, even with nothing in our portfolios. A tech downturn is going to impact us disproportionately already, so adding exposure in our investment portfolios is adding extra risk in a way that it is not for a more typical investor.

That doesn't mean "don't invest in technology", but it does mean that you need to be more careful about how you reason about it and not just brush the decision off as your willingness to "accept some level of risk."

In March 2012, the San Jose Mercury had headlines like "No end in sight to Apple growth? Even after paying for dividend and stock buyback, tech giant’s shares are likely to keep rising" and "Regular folks rewarded for patience with Apple stock riches".

Articles like those should be scary to anyone around during the tech bubble. Back in March 2000, Cisco was the world's most valuable company and everyone was buying the stock because of all the cheerleading articles. Now Cisco is #52 most valuable company and the stock has been flat for a decade. Looking at AAPL and CSCO stock charts shifted by about 10 years is very interesting.

This reads like I think Apple will do the same thing as Cisco, so let me be clear that I have no idea what Apple stock will do. I just want to provide some history about the Cisco stock trajectory for those readers who were in elementary school at the time :-)

(By the time I'd found the articles I was looking for, this had dropped off HN's front page, so I may be wasting my time writing this.)

FWIW, I get (and got) the point. Restating the gp's arguments doesn't somehow make them more true. But let me clarify my own point.

Suppose that industry X is the best industry to be in from a long term income and investment point of view, but that it's volatile in the short term. If the volatility is dangerous to you and you can't accept that level of risk, then diversification of your income and investments is wise.

However, if you have sufficient risk tolerance, e.g., enough money in the bank and time on your hands to survive through the fluctuations, then it is still better to be all-in on industry X for your overall growth. Because it performs better over the long term.

I'm kind of assuming here, for the sake of argument, that you maintain the same income+investment industry mix over time rather than changing it up periodically and trying to beat fluctuations. But, I hope this makes my point more clear.

For the second time you treat me like an idiot and assume that I'm missing the obvious and excluding the income aspect. I'm not. Let me come out and state it triple explicitly so it's clear to you:

I see the income aspect. I realize that a loss of income is costly. I realize that income performance is correlated to the industry it's in and hence correlated with stocks in the same industry. That's the whole basis for the discussion and I see that. Jesus!

I see that, and I still disagree.

This is where both approaches can be right and this is the whole point I have been trying to make. For the sake of argument, suppose you have a trillion dollars in the bank and therefore infinite risk tolerance. Suppose also that your income is 100k. At this point, temporary loss of your income, which can also be reduced by unemployment pay, is wholly inconsequential compared to maximizing your gains in the stock market. If the tech sector pays back at 20% y/y (average) and the next best sector only pays back 5%, absolutely it's better to be in the tech sector even though your income comes from that. My example is unrealistic, but it serves a point: mathematically, it works. So the question is then how much risk (i.e. volatility) can you take in pursuit of maximizing returns? If you have a lot of assets, plenty. If you have no assets and therefore no risk tolerance, obviously diversifying your income from your investments is a good idea. But crucially, whether or not same-sector income/investment is a good idea all depends on how much risk (i.e. volatility) you can take.

Would you suggest Steve Jobs shouldn't have held Apple stock? I think it worked out pretty well for him.