[simmons]

I don't claim to be any kind of investment guru, but here's my two cents.

I've had solid returns from investments in industry segments I've worked in. The strategy outlined above by wegs2 reflects my thoughts almost exactly, including not investing more than 25% into these "personal experience" investments, since it inevitably means putting many eggs in few baskets. Most of your investments should be in lower-risk, highly diversified things like index funds.

I'd add a couple of additional things:

1. I'm pretty confident about predicting the success of an industry, but not individual companies. There's just too many factors in play to predict individual winners and losers. So within the "personal experience" investments, I hedge across several competitors who I think have good prospects. (Happily, all such companies have done well, so I guess I've avoided winner-takes-all outcomes.)

2. Even in industry segments I'm very familiar with, I avoid companies that are prominent household names. I think there's just too much investor psychology wrapped up in this, and overvaluations are more likely. So I avoid investing in companies like Google and Apple. (Granted, if I had invested in Apple it would have done well! But it being a household name gives me cold feet.) One way to avoid this is to consider upstream suppliers the general public may not be familiar with, but nonetheless produce great value and have good prospects.