- ~50% of it sit in one (1) stock - a large cap growth company. The reason - I was an employee that got a good package that appreciated a lot throughout the years and I never sold. I also don't want to sell as I truly believe in the future of the company. I'm a buy an hold guy. Love to read financial news and investments.
If you like to read about news and investments, you must be familiar with specific company risk.
https://www.investopedia.com/terms/c/company-risk.aspYou say you were an employee. How long has it been? Are you still in touch with current employees? Internal chat boards?
And how about the top management? Has it been stable? Are the people stable?
Any company could face scenarios like:
1) Coronavirus pandemic: wiped out movie theaters, travel and leisure. The services will be back, but there is no guarantee that current stockholders will still run the assets.
2) China / US trade war: WeChat is in the crossfire. Previously, it was Qualcomm. When a for-profit enterprise is caught in a political game, you have to understand they are playing a different game, and the rules won't make sense through an investor's lens. The solar power industry was caught in this for several years, with the Chinese government propping up companies that couldn't cover their variable costs--because they viewed the technology as strategic.
3) CXX is found philandering / embezzling / self-dealing / being unethical. Too many examples to count.
4) You are doing so well that Europe decides to go after your monopoly. Microsoft was the whipping boy for a long time. Now Google and Facebook face a "digital tax" because so much money is being funneled into them via global accounts.
5) Visionary leader has the pedal to the metal. Tesla has been nearly bankrupt 3 times. Once, they prepared and had agreed a buyout by Google, if a secondary stock offering didn't go through. The auto industry is capital intensive--they are not through with near-death experiences. Elon does not care, in a personal sense--he has enough money. He is taking shots at doing big things. Some will fail. Even he is diversified, even just from companies he is running.
and so on.
If you think you are on top of these for your chosen company, more power to you. But I would propose it is impossible to deal with all these risks, as well as other external circumstances, for the balance of your life. Therefore, diversification is worth the reduced reward potential, to keep this portion of your portfolio from going splat.
I am an individual stock investor, too. I generally have 10-20 stocks, and I have them in different proportions depending on their prospects. Some of them will blow up. But I can do well by paying attention to the risk / reward: a stock can only go down 100%. It can go up infinitely. But, if your one stock goes down 100%, there is no chance to recover. You have to have a well-cultivated garden to truly flourish.
Good luck to you, however you proceed. For me, who is heavily weighted stocks in the first place, and an informed participant, I couldn't sleep at night with 50% in one stock. Numbers aside, that would decide it for me.