Diversify or die

Houston and Silicon Valley experts advise investing outside the box

The Bayou City knows energy. Silicon Valley knows tech. But each can't only invest in what they know. Getty Images

There's an adage in investing that you should only invest in what you know. Generally speaking, this is a good rule — if you do not understand a company product or have no experience with its industry, then investing in a specific company could be risky. Yet, there are times when it's necessary to get out of your comfort zone and try something new and adventurous. The challenge is determining how to do that.

We are financial advisors from Houston and San Francisco, and we frequently do just that — encourage our clients to explore investments out of their comfort zones.

In Houston, we understand energy. As of 2017, Texas accounted for 37 percent of the nation's crude oil production and 24 percent of its natural gas production. And as of January 2018, Texan oil refineries accounted for 31 percent of the nation's refining capacity — and that is just oil. In 2017, Texas lead the country in wind-generated electricity and generated a quarter of all wind power in the US. It is safe to say, we feel comfortable talking the language and investing in the energy industry. Whether it is machinery fabrication for upstream, construction of pipes for midstream, or refining downstream, some Texans are comfortable investing in these areas.

In San Francisco, we understand tech, whether it involves social media, silicon, or apps. We have five of the top 10 most prominent tech companies in the world. In 2018, the technology industry accounted for around 62 percent of all office leasing activity in San Francisco. The Bay Area also dominates venture capital investment, accounting for 45 percent of all capital investment in the U.S, in large part because of tech startups in the area.

Naturally, we see that some investors in our hometowns feel comfortable investing extensively in these two industries. Sometimes, these investments take the form of venture capital, other times they are individual stocks.

For Houstonians, allocating all of their investments to the energy industry carries too much risk should the energy industry falter. The same is true for San Francisco with venture capital and technology.

Therefore, we encourage investors to diversify their portfolios by placing funds in multiple vehicles and equities with the knowledge that different industries will react differently to market ups and downs. While there is never a guarantee of the outcome, diversification is one of many factors critical to long-term investment success.

For Houstonians and San Franciscans, there are other industries we understand in which we can invest. For example, Houston boasts the largest medical center in the world with roughly 361,000 people employed in the healthcare industry. While San Francisco employs roughly 277,500 in tourism. If you're looking to diversify your portfolio, look around to see the opportunities in which other people are investing. You may be surprised about what you learn, and ultimately how comfortable you can become investing in industries you may be unfamiliar.

We do not recommend ever investing in a product or industry that you have no understanding of at all. However, if you have excitement about an investment opportunity and feel there is potential for growth to your portfolio, your investment may prove fruitful in the future. Still, please seek out a financial advisor to help.

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Joseph Radzwill is senior vice president and financial adviser with the Wealth Management Division of Morgan Stanley in Houston. Victoria Bailey is a financial adviser with the Wealth Management Division of Morgan Stanley in San Francisco.

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Building Houston

 
 

Houston is hosting a bit of a tech takeover next week. Photo via Getty Images

For the second year, Houston Exponential has tapped into the Houston innovation ecosystem to coordinate a week of events to speak to the city's startups, investors, and startup development organizations.

Houston Tech Rodeo will feature over 160 events between May 16 to 23 both online and all across town. From panels and meetups to office hours and pitch events, there's a lot to navigate in the second annual week. For a complete list of Tech Rodeo events (most of which are free), head to the website.

Here are the events you should make sure not to miss. (InnovationMap is a partner for the event.)

Note: You must register for HTR to be able to register for each event. For that reason, the event pages aren't linked directly. Find the information for each event through the HTR event website under the agenda tab, then sort by the day to find the specific event.

Monday: Gettin' in the Game with Master P: A Fireside Chat

The second annual Houston Tech Rodeo kicks off with hip-hop mogul, actor, producer, entrepreneur, and philanthropist, Percy (Master P) Miller on Monday, May 17, at 8 pm. "Gettin' In the Game with Master P" will be an exclusive fireside chat with the legend himself, interviewed by A-List Angels author and former Forbes editor, Zack O'Malley Greenburg. Hear about Master P's journey going from an international rap artist to a CEO, avid investor, and founder of Nemesis RR-- adding diversity in the automotive industry and empowering a culture of dreamers.

The event is free and available online. Register online.

Other Monday online events not to miss:

  • 11 am — HTX: Building a Thriving & Inclusive Innovation Ecosystem — join leaders from across the region's startup ecosystem, including Halliburton Labs, DivInc and The Ion, as they discuss how Houston has become a thriving hub for digital technology while fostering a culture of inclusive innovation.
  • 3 pm — All Roads Lead to Houston - Cross Industry Collaboration, the Intersection of Innovation — this event will focus on the "how" rather than "why", systemic barriers to collaboration, and available resources to analyze, de-risk and solve technology problems through meaningful collaboration.

Tuesday: Unleashing Innovation for Resilience in Disaster and Risk Mitigation

Tired of the hurricanes, snow and ice, COVID and just about every other disaster affecting Houstonian's businesses, homes, communities? Join risk mitigation experts for an in-person and virtual panel on May 18 at 2 pm. The panelists will address how Greater Houston becomes an innovation hub for pre-disaster and risk mitigation across droughts and floods, spills and leaks, fires and explosions, health and pandemics...and engages diverse populations for inclusion as entrepreneurs and mitigated locations.

The event is free and available online. Register online.

Other Tuesday online events not to miss:

  • 11:30 am — Demystifying Med Tech & Digital Health InvestmentsAttend this event to learn from the experts on what investors are seeking in digital health and med tech.
  • Noon — Made in Houston: Building Houston's Digital FutureHouston is on a mission to lead the way in digital transformation. How governments and corporations should accelerate the use of tech solutions and services while balancing the concerns of individuals on the adoption of such tools?
  • 5 pm (hybrid) — HTX Sports Tech: Panel & Happy Hour — HTX Sports Tech is hosting an in-person and online happy hour discussion between Houston's esports and sports industry leaders as we'll discuss the landscape of the esports and sports tech industry, share ideas on the role the industry can impact Houston's developing tech ecosystem, and opportunities to shape the future of the industry through innovative and collaborative efforts.

Wednesday: How Will Innovation Create a Diverse Rising Tide Within Houston's Ecosystem?

Houston is building a thriving innovation ecosystem, but innovation itself won't advance diverse economic prosperity given the status quo. So the question is…how will Houston leverage the city's biggest asset — its diversity — to maximize our potential? Panelists discuss at the online event on May 19 at 11 am.

The event is free and available online. Register online.

Other Wednesday online events not to miss:

  • 11 am — The Big Deal with EsportsDid an esports tournament really sell out the Staples Center? Did the winner of the Fortnite World Cup really make more than Tiger Woods in the Masters? Is esports really bigger than Major League Baseball? Join the discussion on how esports is transforming the business of competitive entertainment.
  • 3 pm — How 3D Printing Can Transform Houston's Manufacturing LandscapeJoin Houston 3D printing experts as they discuss the changing manufacturing landscape of the city and highlight the importance of innovation, economic impact, and sustainability through the adoption of industrial 3D printing technologies.
  • 4 pm — Rice Business Entrepreneurship Association Presents: Throw Your Wild Idea into the Arena First Pitch Competition Have you identified a problem space and a tech-enabled potential solution? The Rice Business Entrepreneurship Association wants to hear your early-stage wild idea. Come make your 90 second pitch and seek advisors, team members, and helpful feedback on your concept. Submit your info here.

Thursday: Female Founders' Tough Lessons Learned

Have an idea for a startup, already launched and building your startup, or just want to hear from those who've already been there? Join a powerhouse panel of female startup founders on May 20 at 9:30 am. Listen as the panelists share their journey and entrepreneurial struggles, and what it really takes to launch and run a startup.

The event is free and available online. Register online.

Other Thursday online events not to miss:

  • 11 am — BORN GLOBAL — Houston Tech Rodeo's International track will offer thoughtful discussions on the hour beginning at 11 am with a keynote.
  • 2 pm — Creating Space (and Tech) for DiversityA diverse panel of experts in space and technology will speak on their experience in these fields.

Friday: $50k Houston Investment Challenge

The Capital Factory challenge will occur on May 21 at Houston Tech Rodeo in partnership with Houston Exponential and will feature five technology startup finalists from greater Houston that will be evaluated by a panel of successful entrepreneurs and venture capitalists. One will walk away with a $50,000 investment.

The event is free and available online. Register online.

Other Friday online events not to miss:

  • 11 am — FemTech Panel — Join a virtual discussion with femtech leaders brought to you by FemTech Focus.
  • 1 pm — Innovation at Scale: Boosting Climatetech and Clean Energy Startups — Join Greentown Labs Houston for a virtual panel on incubating and supporting clean energy startups. The panel, featuring leaders from the regional climatetech innovation ecosystem and moderated by Greentown Houston Launch Director Juliana Garaizar, will discuss how to best set up startups for success and scale.

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