Hi earlybird,
Here are some articles/papers on Diversification of Concentrated Positions from Eric Haas. I thought Persuading Clients to Diversify Successful Company Stock would be good for someone in your situation to read.
Here's a quote from Fooled by Randomness [page 10 of the hardback version]:
I have not died yet in my 30 years, yet I still have life insurance because my failing to continue living and earning money will be too costly to bear for my family.
Now, not loading up own your employer's stock will look extremely stupid when the stock is doing wonderful, and I'm pretty sure that tons of your DH's coworkers will be loading up, and telling everyone how smart [for whatever reasons] they are because they're loading up. This is exactly what has happened thousands of times before, most notably in the tech boom of the late 1990's, Enron, Worldcom, etc, etc...
Diversifying at this time will be extremely emotionally hard, just like not totally loading up on energy stocks and commodities is know [or tech stocks in the 1990's or the "transistor" stocks in the late 1960's]. Also, that employer stock may not ever tank, and you'll probably here it from various people about how foolish you guys were not too load up.
This is the difference b/w strategy and outcome. A good strategy [like diversifying] is a good strategy no matter what the outcome is [whether or not that one stock tanks or does extremely well].
Yet another wrench to throw in the works is that not only does the employer stock depend heavily on the company, but so does the pension. A triple whammy would be for the employer stock to tank, DH too lose his job, and then the company says "Oppsie, we're going to shed our pension plan off on the PBGC. But hey, thanks for all those years of making us money."
You can check out what the Pension Benefit Guarantee Corp [i.e. PBGC] guarantees, including the max they pay for pensions they take over.
Scared yet.
- Alec
Here are some articles/papers on Diversification of Concentrated Positions from Eric Haas. I thought Persuading Clients to Diversify Successful Company Stock would be good for someone in your situation to read.
Here's a quote from Fooled by Randomness [page 10 of the hardback version]:
I have not died yet in my 30 years, yet I still have life insurance because my failing to continue living and earning money will be too costly to bear for my family.
Now, not loading up own your employer's stock will look extremely stupid when the stock is doing wonderful, and I'm pretty sure that tons of your DH's coworkers will be loading up, and telling everyone how smart [for whatever reasons] they are because they're loading up. This is exactly what has happened thousands of times before, most notably in the tech boom of the late 1990's, Enron, Worldcom, etc, etc...
Diversifying at this time will be extremely emotionally hard, just like not totally loading up on energy stocks and commodities is know [or tech stocks in the 1990's or the "transistor" stocks in the late 1960's]. Also, that employer stock may not ever tank, and you'll probably here it from various people about how foolish you guys were not too load up.
This is the difference b/w strategy and outcome. A good strategy [like diversifying] is a good strategy no matter what the outcome is [whether or not that one stock tanks or does extremely well].
Yet another wrench to throw in the works is that not only does the employer stock depend heavily on the company, but so does the pension. A triple whammy would be for the employer stock to tank, DH too lose his job, and then the company says "Oppsie, we're going to shed our pension plan off on the PBGC. But hey, thanks for all those years of making us money."
You can check out what the Pension Benefit Guarantee Corp [i.e. PBGC] guarantees, including the max they pay for pensions they take over.
Scared yet.
- Alec
