4 ms·

Generally speaking, holding (significant to you) stock in your employer is a bad strategy. Because if the company goes under you lose your job, and your saving

Generally speaking, holding (significant to you) stock in your employer is a bad strategy. Because if the company goes under you lose your job, and your savings at the same time. In other words it consolidates risk rather than diversifies it. But honestly the idea that you don't need a raise but rather invest and wait for a dividend return is bonkers. Those are to completely unrelated things. By all means invest. There are lots of stocks to choose from. But that's completely orthogonal to your salary package.

alwayslikethis 4y ago
Theoretically you can short the stock to offset the risks, though this creates a conflict of interest and can be considered insider trading. Alternatively maybe invest in a fund that invests in a competitor and other industries.
- nradov 4y ago
  VTSAX has all your bases covered there.
  - tombert 3y ago
    That's pretty much what I've always done (well, the ETF equivalent VTI), even when I worked for S&P500 companies like Walmart or Apple. I wanted to hedge my bets a bit and make sure that even if the company went a bit pear-shaped, I would have my money stashed in whomever was there to pick up the pieces. You know, I never even considered that maybe I should have disclosed that to employers until right now...
- jameshart 4y ago
  Most companies forbid their employees from holding derivative or short positions in the company’s stock.
foogazi 4y ago
> Because if the company goes under Microsoft is not going under
- naruhodo 4y ago
  I can dream.
- doctor_eval 4y ago
  It doesn't have to go under under, it just has to go under the price you purchased at. The chance of you being laid off after a stock price fall is most likely correlated.
- bruce511 4y ago
  (I did say "generally speaking...") There are some companies that are "unlikely to fail" in the sense that their stock price falls to zero. I would agree that Microsoft likely falls into that category. But really large companies have "failed" in very short time. Usually as the result of some sort of illegal activity. WorldCom being the obvious example here. (A place where employees were "strongly encouraged" to buy their own stock.) Bear Stearns, Lehman Brothers and others have also been "too big to fail" - yet failed. The fact that these events are relatively uncommon (for the very large) doesn't negate their impact. Equally less-large companies fail all the time, and so if you work for something a bit smaller it's a prudent strategy to invest you time in one place, and your assets elsewhere.

alwayslikethis 4y ago

Theoretically you can short the stock to offset the risks, though this creates a conflict of interest and can be considered insider trading. Alternatively maybe invest in a fund that invests in a competitor and other industries.

nradov 4y ago
VTSAX has all your bases covered there.
- tombert 3y ago
  That's pretty much what I've always done (well, the ETF equivalent VTI), even when I worked for S&P500 companies like Walmart or Apple. I wanted to hedge my bets a bit and make sure that even if the company went a bit pear-shaped, I would have my money stashed in whomever was there to pick up the pieces. You know, I never even considered that maybe I should have disclosed that to employers until right now...
jameshart 4y ago
Most companies forbid their employees from holding derivative or short positions in the company’s stock.

foogazi 4y ago

> Because if the company goes under Microsoft is not going under

naruhodo 4y ago
I can dream.
doctor_eval 4y ago
It doesn't have to go under under, it just has to go under the price you purchased at. The chance of you being laid off after a stock price fall is most likely correlated.
bruce511 4y ago
(I did say "generally speaking...") There are some companies that are "unlikely to fail" in the sense that their stock price falls to zero. I would agree that Microsoft likely falls into that category. But really large companies have "failed" in very short time. Usually as the result of some sort of illegal activity. WorldCom being the obvious example here. (A place where employees were "strongly encouraged" to buy their own stock.) Bear Stearns, Lehman Brothers and others have also been "too big to fail" - yet failed. The fact that these events are relatively uncommon (for the very large) doesn't negate their impact. Equally less-large companies fail all the time, and so if you work for something a bit smaller it's a prudent strategy to invest you time in one place, and your assets elsewhere.