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Old 07-03-2014, 08:00 AM   #41
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I've never purchased an individual stock or option.

Although I worked in silicon valley and I would describe my employers as megacorps, they were not publicly traded so I didn't receive any stock or options. The only exception was my last company which I worked at for just over a year (long enough for initial grants to vest) but this was a small amount in the overall scheme.

We made our networth by old fashioned investing in index funds and ETFs (and the occaisonal active mutual fund where no suitable index was available). Maxing out 401k/403b plans and also investing a big chunk of change in taxable accounts.

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Originally Posted by NW-Bound View Post
Yes, a lot of workers dream of striking it rich by working for the right startup. However, for each new venture that makes it big, there's perhaps 99 others that fail miserably. I know because I spent 9-10 years working as a founding member of two of them, first as a moonlighter, then as a full-timer. They failed miserably. I am doing OK now, but would have more money in a 401k and a pension too, if I had stayed at megacorp. I left megacorp mainly because I was fed up with the work environment, and not really because I was chasing that elusive pot of money.
I had many friends and close colleagues that worked for startups. In fact, pretty much everyone I know who was older than me had done their time in startups. One colleague was an early employee of Oracle (think teens) but left because he thought their software was crap. Another had something like $8M in vested options but failed to sell (the stock had a "momentary" dip and he thought it would go back up). It was worthless by the end. Lots of friends and colleagues did stints at failed start-ups during the dot-com era. All are doing ok but none hit the jackpot.

I didn't get out of school until late 2001 well after the dot-com crash. And for whatever reason I didn't work for startups and stayed at megacorp. I did interview a few times and found that my salary was way above my position if I were to go to a startup. So I guess I took the "slow and steady" approach vs IPO lottery.

I got out early this year, so I didn't have a long working career (I also took about 9months off on LOA). But I think the recession helped me greatly and wouldn't have done as well without it.
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Old 07-03-2014, 08:29 AM   #42
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Most of our money is a result of the sale of a family business.
So, technically it was one source, never publicly traded.
Since the sale, I have diversified greatly into about 25 dividend payers. Our biggest holding is about 7%.
We did invest a bit over 1% into a speculative non dividend payer and that one has really taken off to about 6%.
The dividend payers and recovery have basically doubled our portfolio over 9 years.
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Old 07-03-2014, 09:01 AM   #43
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Although one stock didn't make me rich, my company stock options and RSA's certainly helped. The stock has gone up 5X in my 10 years, but I sold off most of it at about 2-3X. I just couldn't stomach a higher concentration in one stock. In hindsight, letting it ride would have allowed my to walk away a couple of years sooner, but it also could have gone the other way. I consider it a lucky break since I would have never invested that amount in that stock on my own.

I'm out completely now and looking forward to a "boring" 55/35/10 split of low cost funds.
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Old 07-03-2014, 09:03 AM   #44
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"Did you exercise and hold, or are these shares you hadn't yet exercised? The difference between the grant price and the exercise price is income, since this is considered compensation. I don't think you have a case to say otherwise. But if you exercise and held (and you must've paid the difference in price at that point as income, or else you owe back taxes for that year), any increase in value since is capital gains."

I hadn't exercised them. My CPA had advised they were deferred compensation, and as such, weren't earned income in the current year. He claims to have argued this successfully before. If rejected I will ask him to give it a try. Thanks for your input and I will follow up when I get a ruling. The example the person gave me was an attorney who worked a case that wasn't settled prior to his retirement. They considered that deferred comp.
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Old 07-03-2014, 09:12 AM   #45
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Most of my pre-tax investments are in index funds and post-tax investments are in individual stocks, but none of these generated substantial wealth. However, my stock options and grant equity certainly contributed.
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Old 07-03-2014, 09:46 AM   #46
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In my days of working full-time, I invested in individual stocks putting in $10k each time. Here are the net proceeds from my star performers:
Apple - $192k
IBM - $180K
Jones Soda - $96k
Total -$470k

Now I focus on total value stocks. And I keep my individual holdings to under 5% of the total. This is the first time I have looked at their total production. I guess it set me up pretty well!

I also had a stop loss strategy to unload the dogs. So that gross yield should be reduced by $60k to cover those. There were plenty and also many smaller gains. It required a level of scrutiny that I no longer care to deploy. Plus my broker also retired. (He always took the bus or drove his Ford!)
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Old 07-03-2014, 11:05 AM   #47
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Short answer: Yes, a single stock will be responsible for almost all my net worth.

Long answer: I didn't plan it that way, and my path to retirement is one I definitely WOULD NOT recommend to anybody.

Never bothered saving much until I was in my 30's, and then when I left the IT field and got into real estate, I lost everything I had trying to keep that business running. Basically had to start over from zero again in my early 40's.

Was blessed enough to join a pre-IPO startup when they were still only about 50 people. I early exercised my entire original grant, and they've since IPO'd, and have a great roadmap ahead of them.

At the price it's trading at today, the value of my stock is a life-changing amount of money, but it's definitely "eggs all in one basket" which makes me nervous. But, I truly believe they have a lot of growth ahead of them, so doubling/tripling/etc is definitely possible. So for now, I'll leave all the eggs in one place. But if they double, I might start taking some of the money off the table to buy a house and diversify a little, just in case.
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Old 07-03-2014, 11:28 AM   #48
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Short answer: Yes, a single stock will be responsible for almost all my net worth.

Long answer: I didn't plan it that way, and my path to retirement is one I definitely WOULD NOT recommend to anybody.

Never bothered saving much until I was in my 30's, and then when I left the IT field and got into real estate, I lost everything I had trying to keep that business running. Basically had to start over from zero again in my early 40's.

Was blessed enough to join a pre-IPO startup when they were still only about 50 people. I early exercised my entire original grant, and they've since IPO'd, and have a great roadmap ahead of them.

At the price it's trading at today, the value of my stock is a life-changing amount of money, but it's definitely "eggs all in one basket" which makes me nervous. But, I truly believe they have a lot of growth ahead of them, so doubling/tripling/etc is definitely possible. So for now, I'll leave all the eggs in one place. But if they double, I might start taking some of the money off the table to buy a house and diversify a little, just in case.
Pretty ballsy move. Ever hear of Enron? I would seriously consider taking some chips off the pile if you can. So you only get a double instead of a triple. You might sleep a hell of a lot better.
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Old 07-03-2014, 11:42 AM   #49
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Pretty ballsy move. Ever hear of Enron? I would seriously consider taking some chips off the pile if you can. So you only get a double instead of a triple. You might sleep a hell of a lot better.
+1 LoneAspen - you are much braver on this front than I!
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Old 07-03-2014, 11:43 AM   #50
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Not one but 2 stocks...but that was just before 2001. My old boss and I (who is now a good friend) would say..one more year like this and we are out of here...

We never got the one more year and while most of the $ have come back it's been a long climb not the rocket that was 1999-2001 for the 2 stocks in question
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Old 07-03-2014, 12:48 PM   #51
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Years ago I worked for a megacorp that had a variety of programs (pre 401 days) to purchase corporate stock at a 10% discount over the market price. Some mechanisms were pre-tax, some after tax. We always managed our lives so that we could live on one persons paycheck so I spent my entire earning on the various programs for about five years. So including dividends, growth and several splits things really got interesting. When I left megacorp I sold it all and have done indexes ever since. Did not get rich by any means but got a great start for which I remain grateful.
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Old 07-03-2014, 01:11 PM   #52
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Quite amazing the amount of people in this thread that got rich (or made a lot of money) on one or a few stocks/options yet the general consensus is that you can't beat the market index. LOL.

I don't see a huge difference in taking a job at a startup, getting paid $50,000 and a bunch of options vs taking a job at megacorp and getting paid $80,000 and investing $20,000 of that in a couple of individual stocks with huge growth potential.
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Old 07-03-2014, 01:28 PM   #53
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Quite amazing the amount of people in this thread that got rich (or made a lot of money) on one or a few stocks/options yet the general consensus is that you can't beat the market index. LOL.
This board has thousands of members and I count roughly 30 on this thread who responded yes, or at least positively - a very small fraction. That doesn't seem inconsistent with the general preference for market index investing, it simply indicates a few found a different way to enhance their bottom line.
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Old 07-03-2014, 02:14 PM   #54
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Quite amazing the amount of people in this thread that got rich (or made a lot of money) on one or a few stocks/options yet the general consensus is that you can't beat the market index. LOL.
I learned that I caught lightning in a bottle, then some of it escaped, and the best way to refill the bottle was from diversifying, much of it in indices. I've never said that one can't beat the market index, but other than a fortunate streak I don't think I can without taking more risk.
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I don't see a huge difference in taking a job at a startup, getting paid $50,000 and a bunch of options vs taking a job at megacorp and getting paid $80,000 and investing $20,000 of that in a couple of individual stocks with huge growth potential.
I think there are a lot of differences, too many to list. I would not have taken a big pay cut to work at a startup, unless I was given a significant share of the company and felt prospects are good.
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Old 07-03-2014, 02:25 PM   #55
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I lucked out on company stock options and selling them have become a big part of our retirement nest egg. In hindsight I was wise to turn down offers to go to startups as my stock has continued to appreciate and all of them went out of business. I was just looking at option statements from when I started priced below $5 now above $60. Now if I had the guts to hold those to today we'd be in a beach house in Kauai but I am sure not complaining!


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Old 07-03-2014, 02:46 PM   #56
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Originally Posted by Fermion View Post
Quite amazing the amount of people in this thread that got rich (or made a lot of money) on one or a few stocks/options yet the general consensus is that you can't beat the market index. LOL.

I don't see a huge difference in taking a job at a startup, getting paid $50,000 and a bunch of options vs taking a job at megacorp and getting paid $80,000 and investing $20,000 of that in a couple of individual stocks with huge growth potential.
Most of our nestegg came from megacorp stability and long term investing.

Agree with REWahoo above. This thread is interesting but is a very biased sample of all those taking risky paths. Some who bet and lost are still working, some are not responding because who wants to talk about painful truths?
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Old 07-03-2014, 02:47 PM   #57
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This board has thousands of members and I count roughly 30 on this thread who responded yes, or at least positively - a very small fraction. That doesn't seem inconsistent with the general preference for market index investing, it simply indicates a few found a different way to enhance their bottom line.
1482 views, 30 people positive, assume all of the other views were neutral or negative, that is still 2% that beat the market.

I was under the impression that the amount of people who beat the market by going into one or just a couple of stocks was much less than 2%.
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Old 07-03-2014, 02:49 PM   #58
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1482 views, 30 people positive, assume all of the other views were neutral or negative, that is still 2% that beat the market.
As I said, a very small fraction.

And I'm not sure I'd classify making a killing on company stock options as "going into one or just a couple of stocks". I'd make the assumption those were not the only investments most of those individuals had.
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Old 07-03-2014, 02:51 PM   #59
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I went to work at a startup (and didn't have to take a pay cut) and got stock options. The company never really took off and after about 5 years there, we were bought by a megacorp. Shortly thereafter, megacorp started to lay us off. I made inquiries about my stock options and was eventually sent some documents which looked like creative accounting to me. The upshot was that our stock options were deemed to be worthless. My fellow startup co-workers showed little interest in the whole matter.

My first 401(k) was with a megacorp and their matching funds could only be used to purchase company stock. We could not move it out of company stock unless we were over 55 years old. Fortunately, the company stock did fairly well, but I don't think it did any better than the stock market as a whole. When I left, I rolled the 401(k) into an IRA and was finally able to get it out of company stock.
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Old 07-03-2014, 03:07 PM   #60
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Perhaps it is just survivor bias and we are not hearing from the many people who got stock options that expired worthless. It may be they will not be retiring early and thus don't come to this forum.

We were granted some 20 thousand stock options over several years that mostly expired worthless but managed to get a few tens of thousands from a portion of them. I could have just as easily worked at a different company for a bit more money and put that extra money into Apple, or Gilead, or Netflix....or Etoys or Radio Shack (not that Radio Shack has looked good for many decades).
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