The diversified book that was not.
Set the giant paycheck aside for a second and look only at his financial money. Rs 12 lakh of vested stock in his own company. Another Rs 16.5 lakh of the portfolio in the same sector, because that is what he knows. Rs 28.5 lakh of Rs 42 lakh riding one factor.
| If that one sector falls 35 pct |
Hit |
| Company stock . the ESOP | minus 4.2 L |
| Portfolio . same sector sleeve | minus 5.8 L |
| The diversified book | minus 10.0 L |
That last line is a third of a portfolio he thought was spread out. And it lands the same quarter the bonus gets cut and the layoff list goes around, so his paycheck, the biggest holding of all, takes the hit at the exact same time. The job, the company stock and the portfolio turn out to be one bet wearing three costumes. Familiarity is not diversification.