Most people think of concentration risk as owning too much of one stock. But for tech executives, the exposure often goes further than the portfolio.
Your salary comes from a tech company. Your equity is in that same company or sector. Your career capital, your network, your earning power over the next decade all move with the same industry. When that sector pulls back, it hits your portfolio, your income, and your job market at the same time.
This isn't unique to tech. A biotech executive holding biotech stocks has it. A real estate developer whose net worth is mostly investment properties has it. But equity compensation makes it especially acute in tech, where financial wealth is tied directly to employer performance.
Crypto in 2022 showed how this plays out. When the market pulled back, people who worked in the space, held crypto personally, and were compensated in equity saw all three move in the same direction at the same time. The portfolio, the paycheck, and the job market all contracted together.
Concentration is how a lot of wealth gets built. Early employees at Nvidia, founders who held through an IPO, the developer who kept their Bitcoin. But understanding what you're exposed to if it doesn't work out is just as important as the upside.
That's where scenario modeling helps. What does your financial picture look like if your stock drops 40% the same year your sector freezes hiring? What if that's the year you planned to exercise options? Running those scenarios doesn't mean you have to sell. But it means you hold with your eyes open, knowing what the downside looks like across your full balance sheet.
Your career is an asset. It generates cash flow, it has a trajectory, and it's concentrated in a sector. Modeling the scenarios where that works against you is what turns a gut feeling about risk into a plan.
For educational purposes only. Not tax, legal, or investment advice.