Did you get rich on a single stock?

[NW-Bound]

Did you get rich on a single stock or sector?

The reason I ask was that so many people in the FIRE Milestone thread claim wonderful returns, far more than a person can save from his salary. There are also many high-tech workers who get stock options from their employers. Those can get you to FIRE status fairly quickly.

As I often told the story, I worked for old-fashioned megacorps where options were only given to people far too many levels above me. Even at a junior VP level, I doubt that they give enough stocks that can give one a life changing gain.

So, I got to FIRE by my own investing, and I have always been too chicken to put it all in a single stock. I never have more than 2% in any single stock, and usually it's only 1%. My large position right now at 4% is an ETF. So, you can see that I am fairly diversified.

However, the above does not mean that I do not maintain concentration in a sector or industry. From 2003 to 2007, my portfolio grew by a factor of 3 after heavy expenses, due to concentration in material and mining sectors. These fed off the Chinese economy boom. Thank goodness I bailed out of them in late 2008, else would give back all the gain and then some. Since the Great Recession, I have been more diversified, but with some weighting in developing countries and some metal stocks. These had terrible years in 2012 and 2013, and did not help my portfolio which overall is roughly on a par with the S&P.

So, tell us your story. What was or has been your concentration? How's that working for you?

Note that this is not intended to be a stock picking analysis, and more reminiscent of past exploits, whether successful or not. By the way, I have also told the story of my heavy concentration in semiconductor stocks, which hurt me quite a bit in the 2001-2003 recession.

 

[sanfanciscotreat]

Yep, got very well to do on my employers stock through profit sharing, stock bonuses, incentive stock grants which were worth about 2 mill. Now sold off to less than 1 mill and the stock is still going up. Nice to have 15% LTCGs.

 

[eta2020]

I have (and had) only single stock which makes up about few percent of my portfolio. It is KO. I did not get rich on it but it doubles dividend every 7 years.

8-10% raise every year is nice thing to have. I plan to keep it for very very long time.

 

[MRG]

I did get Megacorp options, they were nice but I never got rich from them.

We did get handed gobs of stock to prevent a takeover. It turned into 65% of my networth. When Megacorp allowed rolling that money into an rollover 401k it was a no brainer decision to roll it over and get rid of the majority of the shares.

Now if I'd have held the stock till I retired, done an NUA, I'd look really smart to the tune of ~1MM.

 

[RunningBum]

Yes, stock options were a huge boost in my fortune. And then I didn't see the signs and get enough out in time that I lost FI by a bit, and built it back up with a more diversified portfolio. Even with the rollercoaster ride I still credit most of it to that single stock. I should try to figure out where I'd have been if I hadn't taken that job. I also got a salary boost with it that made it easier to save extra, and yearly bonuses for awhile that went straight into savings, so I suspect I'd be working til at least 60, if not 65.

 

[Walt34]

I just do indexes, no individual stocks at all.

 

[FIREd]

Did you get rich on a single stock or sector?

The reason I ask was that so many people in the FIRE Milestone thread claim wonderful returns, far more than a person can save from his salary. There are also many high-tech workers who get stock options from their employers. Those can get you to FIRE status fairly quickly.

According to Quicken, 50% of what we have was saved from our salaries, 40% came from investment returns, and 10% came from inheritances. Half of our investment returns were generated by a single stock. So that stock did not make us rich, but it helped boost our returns.

 

[LOL!]

No, nope. No get-rich quick schemes for us. We simply always contributed the max legally allowed to our retirement plans and IRAs over the last 30 years. Also we were able to add to taxable account, too. We had children along the way and will have two in college in September. Our salaries were not enormous as well. My spouse has never had a 6-figure income in her life. My salary never got out of what can only be generously called low-6-figures and was always below 6-figures when 401(k) and health insurance were deducted. We've been in the 25% marginal income tax bracket for a long time now. We also didn't make a killing in real estate. We have never sold any real estate in our lives. Non-profit employers don't give out stock options, so there were none of those, too. No big 401(k) contributions from employers. I did inherit enough money to buy a used car though.

As far as portfolio goes it is pretty simple in index ETFs and index mutual funds. The top 3 positions are each about 13% of the total portfolio. The top 10 positions are all more than 6% of the portfolio.

Nevertheless our net worth has ended up in the mid-7-figures. Go figure.

 

[aim-high]

One stock. High risk. Gut wrenching experience. Still going. Never recommend it. Wouldn't do it again unless I had more control over the operations of the company. Passive investing with all your eggs sucks! Just thankful that it is working out after many tenuous moments over the years. Many times I wondered if it was all for naught.

 

[scrabbler1]

As I have written many times before, it was the exploding value of my company stock which greatly helped me to RE back in 2008. I began accumulating shares in 1997 when the ESOP first was established. Those shares were cheap and I was still working full-time at the time (share allocation was based on total compensation), so I ended up with a lot of shares. Then in the 2000s the value of these shares simply exploded by a factor of 30 by the time I left the company.

I used NUA (Net Unrealized Appreciation) to cash out these shares when I left the company. By then, 97% of the value was NUA so it was taxed at only 15% (LTCG). Doing this enabled me to preserve all the pretax dollars in my 401k when I did a direct rollover into an IRA, one of my "reinforcements" awaiting me when I enter my 60s.

 

[panacea]

I have owned a couple of individual stocks, which I acquired a number of years when I was in the banking industry. Banks are big with this kind of compensation. I didn't get rich from the stock buy I was very lucky in that I left the banks (I did this two times) right after a bigger bank acquisition which increased the price. Shortly after I left and cashed in, the new bank drove the price into the ground and the colleagues I left behind were financially devastated.

While I sold the stock as quickly as possible and diversified into mutual funds, the stocks helped me to get where I am much quicker.

One other thought... whenever this topic comes up it always reminds me of a UPS employee I knew who worked for the company for 30 or 40 years. After the company went public (not sure when... 10 years ago??) he went from a net worth of maybe $250,000 to close to $14 million. Wow.

 

[retire2020]

Opposite - Robbed by individual stocks. INSP/CMGI/EXDS/SHVA/SUNW/CSCO too many to list from Y2K Era. I had lost about 750K all together during that time. I had made every possible mistakes in investing and had screwed up big time. After Y2K, never invested in individual stocks and all in mutual fund. Just recently learned about index funds last year and since May 2013, I'm on right trek.

 

[W2R]

Oh, I could wish!

No, I never got rich on a single stock. I just ride the market roller coaster via index funds.

 

[Lsbcal]

I got some stock options back in the tech boom. Managed to sell a little but didn't make all that much. That was before the break in late 2000. Held on to them but then when megacorp had the massive layoffs I was one of them. They gave me 3 years after that but the stock was not recovering. Oh well.

Had some nice profits in drug company stocks purchased in 1994 and sold in the early 2000's. I think that having too much in one investment feels like rooting for a sports team instead of owning the whole league. Painful when your team looses and if it wins, you start worrying about the next game. I do not recommend it.

But some have been very fortunate through luck or smarts. Hat's off to them.

I highly recommend a balanced diversified portfolio.

 

[Mulligan]

Opposite - Robbed by individual stocks. INSP/CMGI/EXDS/SHVA/SUNW/CSCO too many to list from Y2K Era. I had lost about 750K all together during that time. I had made every possible mistakes in investing and had screwed up big time. After Y2K, never invested in individual stocks and all in mutual fund. Just recently learned about index funds last year and since May 2013, I'm on right trek.

I was a falling knife value investor. Trouble was I never seemed to ever find the value in them. Thank God I also had Exxon and Texaco at the time to mitigate most of the damage.


Sent from my iPad using Tapatalk

 

[Lsbcal]

I did do some nice timing in international mutual funds in the early 1990's. Had a 6 figure gain out of those. Got out in February 1992 as I recall. I remember going to one investment conference in SF where the small room was packed to see someone talking about international fund investing. A clear sign of trouble brewing in late 1991.

I even had dreams of flying (with no airplane). I would never take such risks now but I was younger, well employed, and looking for excitement.

 

[Moemg]

My late husband got a stock tip many years ago to buy Federal Paperboard which turned into International Paper . It did not make us rich . Hard work did that but it did make us richer . A lot richer !

 

[pb4uski]

No. The only public company I worked for was early in my career. While they had an ESOP that I participated in, it did ok but not stellar. I invested in individual stocks early in my career and did ok, but index funds since then.

 

[Lsbcal]

This thread appears to be going viral. Is so much stock talk a sign of a bull market?

.... yep!

 

[audreyh1]

Yep, pretty much stock options.

 

[aim-high]

This is why I'd never recommend doing it with one stock.



Fortunate to have averaged in mostly from 2003 to 2007.

The difference from the lowest to the highest on the chart is about 85x.

 

[growing_older]

People I know who are truly rich (tens to hundreds of millions and above) got there with either inheritance or through IPO of a single stock, for which they had early "founder" shares. For the run of the mill early retiree, I see a good mix of dedicated savers (usually index investors), government pensions, and real estate (rental property) owners. I also know quite a few not-so good savers who are determined to make their fortune with a start-up stock option windfall who live mostly paycheck to paycheck as they move from one new company to another, hoping for the big score. These people I think are in for a later retirement with very modest means, maybe mostly Social Security and small 401k.

 

[brewer12345]

I've made nice chunks of change with individual securities, but never made one big score that catapulted me to a life of riches. Oddly enough, my two best investments of size were both publicly traded warrants issued by two different companies that had the same CEO.

 

[REWahoo]

No, I did it the old fashioned way, through 30 years of investing, mostly within 401k plans. However, I did get a nice 'parting gift' as my perpetually underwater stock options suddenly surfaced when the company was sold three months before my (early) retirement date. Didn't make me rich but it did add what amounted to one year's salary to my savings.

 

[Animorph]

Stock options from a startup tech company ended up being about 50% of my NW when the company was bought out and we received shares from the purchasing company. After the lockup period I was busy diversifying, 2001-2002. Although the market was pretty well crashed before I could/wanted to diversify, I was able to buy other tech stocks that looked solid to me and had gone down more than my stock. 2003 was a great year and everything ended well, and diversified. I switched to mutual funds when I wanted international diversification. No individual stocks now unless I want to play a little.

My best individual stock was Netflix, with a >10x gain. But only a small position.