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Old 06-24-2011, 08:49 PM   #21
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Originally Posted by DoraM View Post
....any good trader already knows to lock in those kind of gains he claims to have made.
Maybe, but I've never claimed to be a good trader!
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Old 06-24-2011, 10:55 PM   #22
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I was in a similar situation when the company I worked for was bought and my stock options were suddenly worth real money. I was still working and wanted to hang on to the stock (tech, year 200). The financial advisor I hired didn't push me enough to diversify. Nonetheless, a few months after the lock-up ended I started diversifying. In my case I was able to find other solid, low debt, tech companies whose stock price had fallen faster than ours. So I was able to reduce company-specific risk while still retaining the upside pretty well. In a few years I was significantly ahead of where I would have been had I held on to the company stock, and ready to diversify out of tech.

You may not be able to find companies you like as well as your own, biotech seems pretty breakthrough-dependent. Either way, I'd keep working for the year and diversify into similar companies, or sell at least half of you current stake. If you decide to bail now, I'd sell about 90% of the company stock and allocate your portfolio for retirement (like with bonds and cash) before you quit.

Good luck!
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Old 06-24-2011, 11:08 PM   #23
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There was a young guy on the Motley Fool early retirement forum who had retired in the late 90s based on a huge profit from Apple stock options. I can't tell you how many times people told him to diversify, but he kept riding that stock. Then came the tech crash, and he announced he had to go back to work. That was the last I ever heard from him, but I think of him often as an object lesson in diversification.

The only thing (IMO) worse than not retiring early would be retiring early then having to go back to work. The stuff of nightmares. <shudder>
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Old 06-24-2011, 11:46 PM   #24
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At some point last year, more than half our net worth was invested in a single biotech stock and we faced a similar dilemma. The stock had gone up 400% from the depth of 2009, when we had acquired it. This run up allowed us to reach financial independence much sooner than anticipated. My instinct was to sell it, lock in the gains, and secure our financial independence. My wife, on the other hand, wanted to let it ride in hope of hitting an even bigger home run. She argued that the extra gain would give us more financial cushion and a better lifestyle in retirement. After much debate, we decided to sell most of it, and keep only a small "gambling" stake in case the stock went though the roof. I am so glad we did. The stock has lost 50% in the last 6 months. The drop was as sudden and baffling as the 400% rise. Had we not sold it when we did, we would now have to work at least several more years to make up for the losses.

I think that "a bird in the hand is worth two in the bush". Ask the people who lost millions during the dot com bust.
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Old 06-25-2011, 12:27 AM   #25
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.... there may be another site (I haven't checked) called www.late-retirement.org

Wow the backwards bizzaro world
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Old 06-25-2011, 12:40 AM   #26
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IMHO risk is more important than reward (particularly if you have a big net worth) and I think you are overweighting reward as you can ER now and there's no reason to be speculating if that's what you want. You have enough to ER, You could put $300k (3 years expenses) into cash/CDs/short term bonds, then invest $2.5M in a sensible AA looking to generate 4% a year and still have plenty left over to speculate.
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Old 06-25-2011, 05:11 AM   #27
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Quote:
Originally Posted by harley View Post
There was a young guy on the Motley Fool early retirement forum who had retired in the late 90s based on a huge profit from Apple stock options. I can't tell you how many times people told him to diversify, but he kept riding that stock. Then came the tech crash, and he announced he had to go back to work. That was the last I ever heard from him, but I think of him often as an object lesson in diversification.

The only thing (IMO) worse than not retiring early would be retiring early then having to go back to work. The stuff of nightmares. <shudder>

I remember the Apple guy and was going to use him as an example.

During the tech boom I lost count of the number of friends of friend, who's multi million in one or two stocks turned into virtually nothing. In the worse case they got hit with AMT taxes and ended up owing more in taxes than the stocks were worth.

In my case and also in the case of CFB (a well known poster on the board), back in 98 roughly 75% of my net worth was tied up in Intel. I made a decision to diversify, although it was modest painful selling stock and watching it more than double in the next year, and triple in mid 2000.
That pains wasn't nearly as bad as pain when the stock went from almost 80 to 20. I jokingly say that is one way to reduce your allocation from a too high 20% to a more acceptable single allocation is to let Mr. Market take care of your problem. But make no mistake it isn't a fun way. Fortunately, I had enough assets due to diversification that I made when the stock was still going up to be able to ride out the dot com bust and the 2008 crash. I know that many of my Intel co workers didn't do so and were pretty devastated. And this is for Dow 30 companies, with revenues and profits. For dot com stock or biotech stock a 10x stock drop is not at all uncommon and can happen with amazing speed.

I am pretty confident that difference in life style for a family having $4 million vs $1 million is much more dramatic than the difference in life style between having $7 million (and probably even $10 million) and $4 million.
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Old 06-25-2011, 05:24 AM   #28
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Originally Posted by NEOP

Thanks. No doubt good luck was a big factor. Several years ago I opened the IRA. At the time, I think the limit was just something like 3K a year. And I think I contributed for two years. The story roughly is that I bought 24K shares of a company at 25c, made a few trades over the years to get to 33K shares, and now several years later the shares trade at $3.70, which gives the 122K.
Glad to hear that some are having good fortune in the market. I think all the lazy portfolio managers produced about 6 percent over the last decade.You would have been better off buying treasuries and CDs ten years ago at 7 to 8 %. If you followed the gurus advice, like Bogle. for the past 10 to 20 years, you've gotten nowhere. Such is life in the welfare state! Good luck with your decision.
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Old 06-25-2011, 05:52 AM   #29
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Well, I had to look that up today since I wasn't familiar with the term. From dictionary.com I found

"troll- slang ( intr ) computing to post deliberately inflammatory articles on an internet discussion board".

All I can say is that if I said anything that was perceived as inflammatory, sorry about that - it was unintentional.
Troll includes BS posts intended to stir up a tempest in a tea pot. Your initial post had a few of the hallmarks but the trend of the thread would lead one to conclude that you are for real.
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