If you're going to invest, you might use stocks to hedge instead of doubling down. For example, if you love Apple, you might decide to "invest" 20% of your work

If you're going to invest, you might use stocks to hedge instead of doubling down. For example, if you love Apple, you might decide to "invest" 20% of your working hours in building an iPhone app. Since the net present value of your working hours is bigger than the value of your stock portfolio (probably), you are making a massive, undiversified bet on Apple's continued dominance. To hedge, short Apple stock and buy MSFT. That way, as long as you develop a good app, you'll come out okay whether the iPhone gets more popular (you lose money on the short and make money on the app) or less popular (you wasted your time on the app, but made money on your short). In other words, do arbitrage, not directional bets. (Note that this is almost never the right decision to make. The only exception might be if you got most of your income from working on Linux, and you bought shares of a patent troll--the events that make them do well will also hurt your normal income.)