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Which is reckless.... The only situation where that makes sense is if you're not only good at whatever job you have, but you're an expert stock picker and you

Which is reckless.... The only situation where that makes sense is if you're not only good at whatever job you have, but you're an expert stock picker and you discover through your superior skill that the one stock with the greatest upside is..... your employer! The argument against your POV is right in your answer: leaving RSUs as company stock when they vest is no different than a non-employee buying shares of that stock at the vest price. If instead of getting $X in RSUs you got $X in 'bonus' cash every month would you turn around and put it right into your employer's stock? Probably not. Regardless of how confident you are in your employer, most people's single biggest investment is their job. Correlating your investments and your regular income is making an incredibly narrow bet which is reckless unless you can see the future.

TomVDB 8y ago
About seeing the future: one advantage that employees have over investors is the ability to see the future in terms which products are in the pipeline. One other reason to hold on to stock instead of selling are taxes: in the case of ESPP, holding on for a year (or sometimes more), it can make a huge difference in the case of heavily appreciated stock.
- JohnJamesRambo 8y ago
  But they can’t see what is in the future pipelines of competitors or other sectors. That’s where diversification comes in. Picking one stock does not work and has never worked. Just because someone is a dev doesn’t mean they can see the future.
  - notyourwork 8y ago
    Nor can competition see into their competitors pipeline. This is why investments are a bet just like rolling dice in Vegas. A person has to decide their level of risk tolerance which depends on generally where they are at in life (how far/close to retirement) along with unique attributes of their own current financial situation (how much/little debt, how many/few dependencies, how they want to live their life).
  - TomVDB 8y ago
    It doesn’t matter whether or not an employee can look into the future of a different company: he still has the advantage over others by knowing the roadmap of his own company.
- muzz 8y ago
  If this were a material advantage, it would probably be considered insider trading.
  - alasdair_ 8y ago
    Material knowledge is one reason why the optimal RSU strategy is to set up a 10b5-1 (https://www.investopedia.com/terms/r/rule-10b5-1.asp https://www.investopedia.com/terms/r/rule-10b5-1.asp) election to sell everything as it vests, then to cancel the election right before it triggers if your material insider knowledge tells you that the next quarter is going to beat market expectations. Completely legal but obviously ethically dubious.
  - TomVDB 8y ago
    I agree that it could be considered insider trading, but the SEC clearly does not, which is all that matters. It’s simply undeniable that employees know more than others. And it’s unrealistic to think that none of knowledge would ever be helpful to better predict the stock price.
- defap 8y ago
  Yes for ESPP but no for RSUs, which is what folks are talking about here. Selling RSUs when they vest incurs $0 capital gains.
  - jmalicki 8y ago
    For an ESPP, the discount you get from the share price is also considered wages not capital gains (in fact shows up on your W-2 !)
    - TomVDB 8y ago
      That’s only true for the guaranteed discount on the lock-in price (0-20% depending on the company.) For a stock with lots of appreciation, the real bonus is in the stock price appreciation in the 2 year during which the price is locked in. That part gets taxed at capital gains if you hold the stock long enough. https://www.mystockoptions.com/content/how-long-must-i-hold-shares-purchased-under-section-423-espp-to-receive-favorable-tax-treatment https://www.mystockoptions.com/content/how-long-must-i-hold-...
notyourwork 8y ago
> If instead of getting $X in RSUs you got $X in 'bonus' cash every month would you turn around and put it right into your employer's stock? Probably not. Probably is the key word in this statement. There isn't a one size fits all investment strategy so why are we pretending that one exists. My decisions to invest in the company I work for or my lack of risk aversion could be based on attributes that are unique to my situation and not yours (or others). > narrow bet which is reckless unless you can see the future. This is just another way of saying what OP said that I replied to, its not really addressing the point I am making. For example, what if I have a lump sum of money in the bank so I can afford to make a risky decision like doubling down on my employer. What if I have a dual income house hold and we can afford to do this because even if I lost everything my spouse would account for enough income to cover our expenses. Again, stop prescribing one size fits all advice because investing and finance are extremely diverse because everyones situation is unique.
- andrewvc 8y ago
  The way you describe investing "What if I have a dual income house hold and we can afford to do this because even if I lost everything my spouse would account for enough income to cover our expenses" is a lot closer to gambling. They are two very different things.
  - Zecar 8y ago
    All investing is gambling. You're going to reply with a chart of the S&P over the last 100 years engaging in the cliche fallacy of thinking that past returns dictate future results.
  - notyourwork 8y ago
    Gambling is gambling, there are different levels of risk and probabilities you will win or lose but investing is all gambling. Saying its anything else is ignorant of reality.
charlesdm 8y ago
I'm sure the people who received Facebook at $20 who didn't sell are crying their way to the bank.

TomVDB 8y ago

About seeing the future: one advantage that employees have over investors is the ability to see the future in terms which products are in the pipeline. One other reason to hold on to stock instead of selling are taxes: in the case of ESPP, holding on for a year (or sometimes more), it can make a huge difference in the case of heavily appreciated stock.

JohnJamesRambo 8y ago
But they can’t see what is in the future pipelines of competitors or other sectors. That’s where diversification comes in. Picking one stock does not work and has never worked. Just because someone is a dev doesn’t mean they can see the future.
- notyourwork 8y ago
  Nor can competition see into their competitors pipeline. This is why investments are a bet just like rolling dice in Vegas. A person has to decide their level of risk tolerance which depends on generally where they are at in life (how far/close to retirement) along with unique attributes of their own current financial situation (how much/little debt, how many/few dependencies, how they want to live their life).
- TomVDB 8y ago
  It doesn’t matter whether or not an employee can look into the future of a different company: he still has the advantage over others by knowing the roadmap of his own company.
muzz 8y ago
If this were a material advantage, it would probably be considered insider trading.
- alasdair_ 8y ago
  Material knowledge is one reason why the optimal RSU strategy is to set up a 10b5-1 (https://www.investopedia.com/terms/r/rule-10b5-1.asp https://www.investopedia.com/terms/r/rule-10b5-1.asp) election to sell everything as it vests, then to cancel the election right before it triggers if your material insider knowledge tells you that the next quarter is going to beat market expectations. Completely legal but obviously ethically dubious.
- TomVDB 8y ago
  I agree that it could be considered insider trading, but the SEC clearly does not, which is all that matters. It’s simply undeniable that employees know more than others. And it’s unrealistic to think that none of knowledge would ever be helpful to better predict the stock price.
defap 8y ago
Yes for ESPP but no for RSUs, which is what folks are talking about here. Selling RSUs when they vest incurs $0 capital gains.
- jmalicki 8y ago
  For an ESPP, the discount you get from the share price is also considered wages not capital gains (in fact shows up on your W-2 !)
  - TomVDB 8y ago
    That’s only true for the guaranteed discount on the lock-in price (0-20% depending on the company.) For a stock with lots of appreciation, the real bonus is in the stock price appreciation in the 2 year during which the price is locked in. That part gets taxed at capital gains if you hold the stock long enough. https://www.mystockoptions.com/content/how-long-must-i-hold-shares-purchased-under-section-423-espp-to-receive-favorable-tax-treatment https://www.mystockoptions.com/content/how-long-must-i-hold-...

notyourwork 8y ago

> If instead of getting $X in RSUs you got $X in 'bonus' cash every month would you turn around and put it right into your employer's stock? Probably not. Probably is the key word in this statement. There isn't a one size fits all investment strategy so why are we pretending that one exists. My decisions to invest in the company I work for or my lack of risk aversion could be based on attributes that are unique to my situation and not yours (or others). > narrow bet which is reckless unless you can see the future. This is just another way of saying what OP said that I replied to, its not really addressing the point I am making. For example, what if I have a lump sum of money in the bank so I can afford to make a risky decision like doubling down on my employer. What if I have a dual income house hold and we can afford to do this because even if I lost everything my spouse would account for enough income to cover our expenses. Again, stop prescribing one size fits all advice because investing and finance are extremely diverse because everyones situation is unique.

andrewvc 8y ago
The way you describe investing "What if I have a dual income house hold and we can afford to do this because even if I lost everything my spouse would account for enough income to cover our expenses" is a lot closer to gambling. They are two very different things.
- Zecar 8y ago
  All investing is gambling. You're going to reply with a chart of the S&P over the last 100 years engaging in the cliche fallacy of thinking that past returns dictate future results.
- notyourwork 8y ago
  Gambling is gambling, there are different levels of risk and probabilities you will win or lose but investing is all gambling. Saying its anything else is ignorant of reality.

charlesdm 8y ago

I'm sure the people who received Facebook at $20 who didn't sell are crying their way to the bank.