Author Topic: Someone talk some sense into me  (Read 1643 times)

thecrazydoglady

  • 5 O'Clock Shadow
  • *
  • Posts: 26
Someone talk some sense into me
« on: February 06, 2017, 08:17:55 AM »
I purchased my company's stock as part of our ESPP with the intention to sell it right away. 120 shares at $33 (15% off of the price 6 months ago. Well, the price is now up significantly and I know I SHOULD sell it but there is a devil on my shoulder trying to convince me not to. I work at a software company, and while I am pretty confident in the industry, I have a feeling my company will get acquired by one of the bigger players in the next 2 or 3 years. I'll kick myself if it just keeps increasing but I know I shouldn't have all of my eggs in one big employee basket. Could someone talk some sense into me? Thank you!
« Last Edit: February 06, 2017, 12:24:35 PM by thecrazydoglady »

nugget

  • 5 O'Clock Shadow
  • *
  • Posts: 30
Re: Someone talk some sense into me
« Reply #1 on: February 06, 2017, 08:31:59 AM »
I would remove that emotional part of this question, and boil it down to the hard facts.

does this basket fit into your (hopefully well diversified) portfolio*? probably it is extremely overweighting this one company you work for => correct that. everything else is market timing. I think holding this basket is only valid to the extent of some employer's matching or discounts depending on it.

And be sure that you will kick your butt the on way or the other, if this is how you go about "missed gains" ;)


*: one way to check this: check out with what fraction your company is represented in the Vanguard Total Stock Market ETF (VTI). In case its fraction within your personal portfolio is larger, you own too much of it.

brute

  • Pencil Stache
  • ****
  • Posts: 691
Re: Someone talk some sense into me
« Reply #2 on: February 06, 2017, 08:34:55 AM »
Is $2640 worth the rage if you get acquired? Is $3960 worth the agony if your stock goes to zero? If it's an emotional decision, use the right emotions and numbers. Otherwise, keep it and see what happens. This isn't a lot of money we're talking about.

talltexan

  • Handlebar Stache
  • *****
  • Posts: 2439
Re: Someone talk some sense into me
« Reply #3 on: February 06, 2017, 08:43:17 AM »
Does the 15% discount still apply? Getting a 15% jack at time of purchase--on top of the tax savings in an IRA--is nice. You do want to have it balanced with something more, ahem, normal, like VTI. I'd consider a decision-rule such as, "If I have a plan to retire in 12 years, but my company's stock going to zero would delay that by more than 20% (i.e. extend it to longer than 15 years), I own too much".


Mr Mark

  • Handlebar Stache
  • *****
  • Posts: 1173
  • Location: Planet Earth
  • Achieved Financial Independence summer 2014. RE'18
Re: Someone talk some sense into me
« Reply #4 on: February 07, 2017, 01:51:23 AM »
I regularly get a few shares of my company stock as part of a saving scheme and bonus payments. Typically I sell it asap and reinvest into my portfolio as I already have some holding via index funds and I figure I'm already exposed to the companies performance via employment anyhow.

As previously noted, it's a small amount. If you had the cash, would you choose to buy the stock? If not, why hold it?

You don't want to end up in an Enron situation - so many of their employees had pretty much their entire 'stach in company stock and lost everything when they went belly-up.

Hargrove

  • Pencil Stache
  • ****
  • Posts: 717
Re: Someone talk some sense into me
« Reply #5 on: February 07, 2017, 04:35:31 AM »
As already mentioned, would you buy it if you didn't own it? That will get you around your Loss Aversion Bias. If you're not comfortable with the gambling, well, good, just sell all of it.

Another trick is to make a rule for when you'll sell it. "IF X, I will sell immediately," then stick to it and accept the results.

Diversity on your gamble here would simply involve selling half and indexing it. You don't say how much it went up, but if it went up 50%, you're extremely unlikely to "lose the bet" so to speak if you sell half and put it in an index fund.

Heckler

  • Handlebar Stache
  • *****
  • Posts: 1346
Re: Someone talk some sense into me
« Reply #6 on: February 07, 2017, 06:06:32 AM »
My alt fuels company peaked around $50 a few years ago, now at $2.

My sister in laws huge electronics company went tits up.

My old fuel cells company got closed down.

My cousin in law has gone through two "exciting" startups closing down.

I've never owned any stocks of any.

Good luck.