Author Topic: Those at big tech companies with ESPP- do you regret selling any of your stock?  (Read 618 times)

wealthviahealth

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The tech company I have been at for the last 5 years has a great ESPP program ( steep discount on lowest price) and the stock has performed well since I have been there. Once a year I free up a few shares to the tune of $5-10k a year but have kept majority of it. Now that I am moving to a lower COL state and home ownership is a possibility for the first time, i have been thinking about selling a much larger chunk to help fund the downpayment of a house in the next 6-12 months. I normally have a "dont touch it" policy inspired by those millionaire microsoft secretaries but right now the stock is somewhat near all time highs and I other wise am not very liquid when it comes to cash on hand for a downpayment and who knows what the stock/markets overall might do in that time frame with all things covid happening.
Im curious to hear form those with great ESPP programs if they ever regretted selling their shares as well as what their overall strategy has been to selling/not selling.

ixtap

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DH once had good reason to regret not selling.

Now we follow the sell immediately to buy index funds approach.

shuffler

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I sell immediately.

  * The shares aren't magic.  There's no special quality that makes them different from other shares you might buy in the company, or in any other tech company.
  * If you happen to think that the very best place for your money is coincidentally invested in the very same company for which you work, then fine.  If you think that, you should probably be buying even more shares of the company in your 401k and regular after-tax accounts.  But doesn't it seem unlikely that the one place you happen to be working is also the best place for your investments, and not any of the thousands of other companies in the market?
  * You're already waaaaay invested in your company.  Let's count the ways.  You have un-vested stock options that will rise/fall with the success of the company.  Your normal compensation (salary, bonus, scale of future stock awards) are likely to rise/fall with the success of the company.  If you're a home-owner in a company-town (like me), then the value of your home is likely to be impacted by the success of the company.  If your company should fall on hard times (an accounting scandal?  CEO misconduct?), then these ESPP shares might drop in value at the same time you lose your job and your home's resale value tanks.  Yikes!  Do you want to weight your portfolio to rely on this company even more?
  * Some people think there's a tax advantage to holding the shares for a while.  Not really; not practically.  You're still going have the discount taxed as ordinary income.  (There's some fussy math about what happens if the shares have actually lost value by the time you sell them, but you seem pretty confident that that won't be the case.)

So I sell immediately, and then treat the money according to my investment policy, which says to mostly buy an index and a bit of bonds.

Oh, and to speak to the "regret" part.  No, not a bit.  Do you regret not buying Amazon stock 15 years ago?  Maybe you do in a "wouldn't it have been nice" sense, but not a "my life's one regret" sense.  Then you should feel the same way about your own company.  You had free fungible dollars.  You could have just as easily purchased Amazon as you did your own company, or vice-versa.  Why would you regret one more than the other?  So no, I don't regret it.  At least not any more than I regret not buying the winning lotto ticket (and I don't buy lotto tickets).

Paul der Krake

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Ex-big tech employee here. Didn't have an ESPP, but received shares regularly.

Sold them all on vest except for the first batch, which I kept for sentimental/YOLO value. I'd be slightly wealthier had I held. No regrets.

secondcor521

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I worked for a Fortune 500 tech company for about a decade and they had an ESPP during most of that time, although they fiddled with it over the years.  Generally they had six month windows and you got 15% off the lower of the first day's or last day's price.  No holding requirement, so lots of people deferred their salaries for six months then sold the shares the very next day.

I think you could defer up to 10% of your salary, so I did that.  I figured tying up the money for a year to get that kind of return was a good deal.

I went for the tax savings, so what I did was continuously defer salary into the ESPP, buy and hold for a year, then sell at that point.  So I generally had two purchase lots seasoning at any given time.  Proceeds went into whatever the next goal was at the time.  Zero regrets.

I did prioritize the ESPP below the 401(k).  I also had options, and generally exercised those whenever the total exceeded a percentage of my assets (5% or 10%, I can't remember what I used now).

ETA:

With a very few limited exceptions, I've generally just decided to make the best decision with the best knowledge and careful thought that I had at the time, and then move forward and not look back.  I've never done "how much would I have if I'd just done X instead of Y" kind of calculations.  I don't see the point of regretting an alternate universe that I'm not living in.

I also think having a generally prescribed plan laid out works better than a seat-of-your-pants seems-like-a-good-idea-at-the-time approach.  At least it does for me.  Maybe that's something that differs by personality.
« Last Edit: June 23, 2020, 01:21:46 AM by secondcor521 »

Car Jack

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I have a great ESPP.  The company sets the price at 15% below the market price on one of the buy dates.  Then it locks in that price for 2 years.  If a buy comes at anything higher than that lock, it gets dropped to 15% below the market on that day.

What has happened with this is that for example, Market is $50, so price is $42.50.  A year and a half later, a buy comes and market is $100.  So with an immediate sell, I make $57.50, more than doubling my money.  So a great plan.  Worst I can do is make 15% every time.

Another big tech I worked for, I joined and thought I was beyond the cut off date to get into the ESPP.  I put in all the paper work so I'd be in it for the next period.  Well, I was in it....didn't know it.....didn't look at my pay stubs ever.  Some time later, I quit, not knowing I even had shares.  Few weeks later, I receive notice in the mail of how many shares I owned.  Oh crap.  My discounted price?  $48.  Market price?  $12.  I sold and took my loss.  Although it wasn't my intent, I held.  Never will do that ever again, ever.

Plenty of great companies have done similar things.  If you think YOUR company can't, then get someone to hand dig your head out of the sand.

Semag

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I'm with those that sell immediately when able and max it out. The risk is relatively low and the 15% discount is an attractive gain, not to mention if the stock goes up during the offering period.

Our company has a second "non qualified" espp that I also am maxing out to the tune of 25% of my income (so 40% of my income is in espp). Our non qual plan is a "buy one get one" - no discount, but you get issues an equal number of shares at strike date for $0. Only issue is the holding period is 1 year, but it is protected to a 50% downturn. Roughly. Again, completely plan on selling everything the minute it is able to be sold.

sherr

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I sell immediately. Yes I would have historically made more money if I didn't. No I don't regret it at all.

Owning your own company's shares, either in an ESPP or in general, is the exact opposite of diversification. If your company has a bad quarter / year, you may find that your company shares have lost a lot of value at precisely the same time as you find yourself out of a job. Which may also align with a tough time for the industry, making it harder for you to find another job.

Just because that hasn't happened to you or I yet doesn't mean it's a good idea to hold a large amount of company shares. If you go looking you can find plenty of examples of people who it did happen to.

Sell immediately, diversify.

hodedofome

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Tell me the name of the company and Iíll tell you if you should hold or sell. Some are worth selling, some are worth holding.

sherr

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Tell me the name of the company and Iíll tell you if you should hold or sell. Some are worth selling, some are worth holding.

This however underscores the broader point, which is that unless you were going to hold that individual stock anyway, then no you should definitely not hold it just because it's your company and an ESPP.

Goldy

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Big stable company but not tech.  We have a lot of company stock, like 170k worth and buy 10k per year that is matched 1:1.  I sold some last year as we were getting close to 200k and really didnít like the tax hit on my return.  The stock also produces a massive 8-10% dividend which doesnít help the tax return.

My new plan is to hold it until we fire in a few years so we can start liquidating it and stay under the capital gains limit.