Did you get rich on a single stock?

[CyclingInvestor]

Only individual stocks since 1993. I have often had 10-15% in each stock, when I could not find enough high quality (IMO) stocks at good prices. This was especially true 2000-2003, when everything was in about 6 REITs at times. Since the last crash I have had more like 7-8% in each position.

I have never had a BIG home run, but have hit many singles. No stock options to speak of (1 grant worth about $10K, if I remember correctly).

 

[calmloki]

Rental real estate is pretty much the bedrock of our net worth. Over time it generated cash, which we have loaned out on investment property, which generates cash. After sitting out last year's massive stock gains we have been averaging in to the market this year. I'm not happy about it, but don't feel like fixing toilets for the rest of my life or paying too much for substandard work. We'll see how this whole index fund jazz works out - I DO like the idea of unrealized gains reducing our annual income a bit.

 

[38Chevy454]

Never worked for a smaller or start-up company where I would get stock options. Most of mine is earned by savings, small real estate appreciation and a modest inheritance from parents dying much too young to give the total a one-time boost. I would estimate 70% savings, 10% real estate and 20% inheritance as for breakdown of the total contribution from each.

I have gotten co. stock as the match to my salary savings in the past, but I have always invested in mutual funds and those co. stocks are long transferred to mutual finds now. So the easy answer for the orig question, is no I have not gotten rich on a single stock. In reality I do not currently think of myself as rich now either.

Maybe i need that hot stock tip, anyone want to help me out

 

[NYEXPAT]

Not a single stock, but I was short the NYSE composite index (October 1987) futures as an early trader of the NYFE which enabled my ER at the ripe old age of 33.

 

[Ronstar]

Didn't get rich on a single stock, but my Coca Cola gain helped pay off the house

 

[Telly]

Nope. All of the megacorp stock options I received never panned out. And a big "get one share free for every x you buy" deal, well, I still have those shares. Near worthless now. Sometime I will sell them to offset a gain with the loss. The only equity investment I ever made that went the wrong way... way way wrong.

 

[NW-Bound]

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.

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.

But talk about investing, what's better than getting rich off 1 stock? It's getting rich off 5 or 10 stocks! Sure it takes a bit more work, but you will be more diversified than with a single bet. I have told how I grew my stash 3x in the period of 2003-2007. Since then, I have not been doing as well, because I got more conservative.

In the aftermath of the financial meltdown of 2008, many established companies saw their stocks hammered a lot harder than the S&P which lost a mere 50% or so. Here's an example: Caterpillar stock went from $83 down to $25, down to 30c on the dollar. How about Cummins, from $74 down to $21? Caterpillar closes at $110 and Cummins at $154 today.

I saw many stocks like CAT and CMI, and I did buy these and some others. However, I did not get enough, then sold them to book some profits way too soon. I was getting soft. In order to do better than average, one needs the audacity to stay a bit more concentrated to ride the gains a bit longer.

 

[Rdub]

Interesting question. I have worked at the same company for over 16 years. I worked hard, always maxed my 401k and ESPP, saved my options/rsus and lived way below my means. Over the years I harvested my options/rsus/ESPP and diversified into stocks/options/funds/real estate/etc. I am no longer in individual stocks/options, with the exception of company stock ~10% of nw. So in my case, nearly all of my nw was derived from one company/stock. However, my nw growth has come from gains across all asset classes.

 

[John Galt III]

Not rich at all, but doubled my money in Magellan fund back in the 80's. Cashed it in to add to down payment on a house.

 

[Badger]

Our plan was pretty boring with mostly low cost Vanguard and TR Price index and retirement funds. Before I made those changes in the first few years of investing I got burned with a couple of bad choices and realized was not cut out to play with my future financial stability. I never made more than a VERY mid 5 figure salary and my wife was about 10k less. But we did contribute the maximum to our 403b and Roth investments. Once the house was paid off by making 2X payments we contributed that money to taxable accounts. Now the taxable accounts are in what I believe to be good stable individual stocks and producing dividends.

Since we no longer contribute to any more investments the money that we now have to live on (including SS, small pensions, and dividends) is about 90% greater than what we lived on when we were working. Once RMD kicks in it will increase to 130%.

Dad impressed upon me 3 concepts that finally got my attention once I was in my 30's - The grasshopper and the ants, Pay yourself first, and The tortoise and the hare. It seemed to work.

Cheers!

 

[gomo]

MO is by far our biggest winner. MO's dividend alone covers 75% of our yearly expenses. PM and XOM also helped out nicely.

 

[Idnar7]

Had some stock options which I most held off exercising until the expiration year. Exercised the first in 2008 which netted me about 3k when the stock price had plunges 50%. Holding them allowed me to carry some into retirement which came in handy. Now though the SSA claims that they were earned in come. They appear on your W2 and there is nothing to indicate they were from prior years. The onus is on you to prove it wasn't earnings. They are backlogged (of course) so my payment will be withheld for the next 5 months while they review. Nice to have an emergency fund available.

I think the best thing for DW and I was the Enron fiasco which eventually allowed us to diversify our company stock. We both worked at the same Mega, and when we were allowed to diversify, company stock was over 30% of our portfolios. This allowed us to diversify which really helped us sleep better. Between stock, paychecks, and pensions we were way too invested in our company.

 

[RunningBum]

Had some stock options which I most held off exercising until the expiration year. Exercised the first in 2008 which netted me about 3k when the stock price had plunges 50%. Holding them allowed me to carry some into retirement which came in handy. Now though the SSA claims that they were earned in come. They appear on your W2 and there is nothing to indicate they were from prior years. The onus is on you to prove it wasn't earnings. They are backlogged (of course) so my payment will be withheld for the next 5 months while they review. Nice to have an emergency fund available.

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 think the best thing for DW and I was the Enron fiasco which eventually allowed us to diversify our company stock. We both worked at the same Mega, and when we were allowed to diversify, company stock was over 30% of our portfolios. This allowed us to diversify which really helped us sleep better. Between stock, paychecks, and pensions we were way too invested in our company.

I agree, just because some of us hit it big on a single stock doesn't mean that's the recommended path. There are a lot of failure stories to go against the success. Being overloaded on your company stock is a double whammy, because if it goes bad, not only do you lose stock value, but your job is likely in jeopardy.

 

[Totoro]

MO is by far our biggest winner. MO's dividend alone covers 75% of our yearly expenses. PM and XOM also helped out nicely.

I guess your mantra is "Thank you for smoking"?

 

[RockyMtn]

Between ESOP and RSU's I guess you could say it was a single stock. However once they vested I sold so as to not have all my eggs in one basket. While one stock may have provided the foundation for my wealth I would never have the guts to just leave it there and let one stock ride.

 

[photoguy]

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.

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.

 

[Zathras]

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.

 

[Willers]

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.

 

[Idnar7]

"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.

 

[Toocold]

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.

 

[kcowan]

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!)

 

[LoneAspen]

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.

 

[RockyMtn]

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.

 

[Willers]

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!

 

[nuke_diver]

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