Good point! I guess the prudent FAANG engineer would buy a total market fund and then short a portion of their employer to net out the overexposure. Would sure feel odd though!
Be sure to check your employer rules before doing this! It is probably against the rules to short or trade derivatives of your company stocks as an employee. At least at my employer this also applies to any fund containing >10% of our stock too.
A safer approach would be to just purchase a fund which excludes tech. Personally I'm too lazy to do this and just have a total market fund :)
Another thing to keep in mind is that post-2018, a lot of tech companies got categorized as different sectors in the S&P 500. So you'd need an index fund that is ex-tech and/or ex-communications. I've looked around a bit and the fees for these types of funds seem much higher, so like you I just stick with the generic total market fund.
Shorting your employer just in order to net out the overexposure seems putting the cart before the horse. Part of choosing who to work for is believing in the company's future financial outlook, because you are intentionally taking a long position in the company with your RSUs. Taking a short position both costs money and it would be simpler to take a long position in another company by choosing to work for them instead.
On the other hand, if you are 100% certain in your investment thesis that you don't want overexposure to any company including your employer, you could try direct indexing the rest of your portfolio e.g. buy S&P 500 except for your employer. Selling on vest is another simple alternative you could consider.
He was talking about shorting a long, netting a zero position. In and of itself nothing wrong with that. Just make sure the positions move at the same time.
Most companies prohibit any derivative trading on your company stock, even if you're shorting your own long or any other creative way you have of hedging against the stock going down.
A safer approach would be to just purchase a fund which excludes tech. Personally I'm too lazy to do this and just have a total market fund :)