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Diversification can be prudent and doesn't necessarily reflect lack of confidence. Example: pick the stock in your portfolio that you are MOST bullish about.
by webwright 16y ago
Diversification can be prudent and doesn't necessarily reflect lack of confidence.
Example: pick the stock in your portfolio that you are MOST bullish about. Why isn't every penny you own in that stock?
- InclinedPlane 16y agoIt's a little different if you're the founder, CEO, ex-CEO, etc. I don't think it's crazy for officers to sell some of their stock, you've got to convert what you built into cash at some point I suppose. Massive sell-offs are a red flag, but this is only about 6% of his shares, which shouldn't be concerning, especially with Google's sound financial fundamentals.
- hessenwolf 16y agoTo agree with your comment, it is as dumb as a bag of hammers to have all of your savings in the company you work in. You lose your job, and your savings all in one day! This happened, as far as I know, to an awful lot of Bear Stearns employees - because it was considered good teamwork to own nothing but Bear Stearns shares.
- chopsueyar 16y agoDon't forget Enron.
- yummyfajitas 16y agoIn fact, there is a fairly straightforward formula for determining how much you should put in. Unless you are 100% confident, it isn't 100%. http://en.wikipedia.org/wiki/Kelly_criterion http://en.wikipedia.org/wiki/Kelly_criterion Most likely, Eric Schmidt (and most founders/CEOs of big companies) have far more invested in their company than the Kelly Criterion would dictate.