Jason Zweig’s Warning: Count Yourself Among the Eggs
I just finished reading the third edition of The Intelligent Investor by Benjamin Graham. There’s an interesting commentary section in the book written by Jason Zweig, where he defines “human capital” as the present value of all income that your job, career, and education will produce.” He also offers useful advice about the perils of combining your human capital with your financial capital:
“Don’t invest too much of your financial capital in the same industry where your human capital is concentrated.”
This advice highlights the importance of diversification — the principle of not putting all your eggs in one basket. As Zweig warns, “count yourself among the eggs.”
Many of us work for organizations that make it easy to invest in our employer’s shares. Examples include restricted stock unit (RSU) grants, stock option awards, and employee stock purchase plans (ESPPs) that allow employees to buy shares at a discount. Years ago, I even worked for a company whose 401(k) match was allocated entirely in its own stock.
If you’re wrestling with how much of your employer’s stock to hold, assume your company is not another Nvidia, Apple, or Tesla. It’s likely, you’ll be correct.
Disclaimer
TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.