Asset Allocation for Technology Professionals: Accounting for the Risk You Already Carry
A portfolio built for a Silicon Valley household should start with what the household already owns: a tech paycheck, unvested equity, and an expensive home.
Most asset allocation guidance begins with a questionnaire about age, goals, and comfort with volatility. Those questions matter, but for a technology professional in the Bay Area they are incomplete. Before a single dollar is invested, the household already carries a large, concentrated exposure to one industry and one region. A thoughtful allocation accounts for that exposure rather than adding to it.
Start with the whole balance sheet
The SEC's guide to asset allocation explains that the right mix of stocks, bonds, and cash depends largely on your time horizon and your ability to tolerate risk. That framework works well for financial assets. What it does not capture is human capital: the present value of the salary, bonuses, and equity grants you expect to earn over the rest of your career. As Kitces.com describes, for someone still working, human capital may be several times the size of the investment portfolio, and it tends to rise and fall with the industry that employs them. The logical response is to invest the portfolio to diversify around that human capital, which can mean owning less of the technology sector, not more.
For a software engineer at a large-cap company, the list of correlated exposures is long. Salary depends on the employer. Unvested RSUs depend on the employer's stock price. A future bonus or refresh grant depends on the company's fortunes. And a home in Santa Clara County, where the median single-family price was roughly $1.92 million in mid-2026, depends on regional demand that is itself driven by tech employment. The layoff announcements of 2026, including thousands of positions at Meta, Cisco, and others, are a reminder that these exposures can move together at the worst possible time.
Why a market-cap index does not solve the problem
Owning a broad global index fund is often described as diversified, and it is, relative to a single stock. But the technology sector represented about 31% of the MSCI ACWI index as of August 2026, and U.S. companies were more than 63% of the same index. A Bay Area engineer holding a global index fund, company stock, and a local home may find that a large share of their total wealth still rests on the health of the same handful of companies.
That does not make index funds a poor choice. It does suggest that the allocation conversation should include questions like: how much company stock is reasonable to hold given that your income comes from the same place, whether the portfolio should tilt away from the sector you work in, and how much of the plan should sit in assets that do not depend on the tech economy at all, such as high-quality bonds or cash reserves.
Practical adjustments to consider
Treat vested company stock as part of the equity allocation, not as a separate bucket. Some households set a ceiling on the percentage of investable assets in one company and sell down toward it on a schedule, accepting the tax cost as the price of reducing risk.
Consider whether the bond and cash portion should be larger than a generic age-based rule would suggest. Income that is more volatile, or more tied to one industry, may argue for a larger reserve.
Look at sector weights across every account, including a 401(k) that may hold employer stock or a target-date fund with a large technology weighting.
Revisit the allocation whenever a major grant vests, a tender offer arrives, or a job change alters the mix of salary and equity.
The trade-offs
Tilting away from technology has costs. A portfolio that underweights the sector will behave differently from the broad index, sometimes lagging and sometimes leading. Selling appreciated company stock triggers capital gains tax, which in California is layered on top of federal rates. Holding more bonds or cash reduces expected growth in exchange for stability. None of these adjustments is a prediction; they are ways of matching the portfolio to risks the household cannot easily diversify elsewhere.
A question worth asking
A useful exercise is to add up every dollar of exposure to your employer and your industry, including salary, unvested grants, vested shares, and the portion of your home value that depends on local tech hiring. If that total is most of your net worth, the portfolio's job is to be the counterweight. This article is educational only and is not investment, tax, or legal advice; consider consulting a qualified professional about your own circumstances.
Important Disclosures
Important Disclosures: Propulsion Capital Management is an investment adviser registered with the State of California Department of Financial Protection and Innovation. Registration does not imply a certain level of skill or training. This article is provided for general informational and educational purposes only and does not constitute investment, tax, legal, or accounting advice, nor an offer or solicitation to buy or sell any security or to adopt any particular investment strategy. The information is believed to be accurate as of the date of publication but is subject to change without notice; tax laws and regulations change frequently and their application depends on individual facts and circumstances. Nothing herein should be relied upon as a substitute for personalized advice from a qualified professional. Investing involves risk, including the possible loss of principal, and past performance is no guarantee of future results. Diversification does not ensure a profit or protect against loss. Any examples are hypothetical, are for illustrative purposes only, and do not reflect the experience of any client. Links to third-party websites are provided for convenience; Propulsion Capital Management does not endorse, and is not responsible for, the content of third-party sites. Propulsion Capital Management does not provide tax or legal advice; please consult your tax adviser or attorney regarding your specific situation.
