I haven’t seen anyone raise this topic, so I figured I would. This mainly applies to people that work in Asset Management, I suppose… personal experience - work for a relatively large firm. We’ve had a great 6-7 year run and a bunch of employees wanted to get in their various offerings, including myself. to their credit, they turned nearly everyone away saying that as employees we were to correlated considering that they paid us. looking at the recent performance, i’m grateful the higher ups made this call. they are a stand-up group of guys and I have a lot of respect for them. now i’m looking at my 401k investments over the years (and for the first time since 9/30 - yikes!!). 70k put in since '03 (i’m in my mid- to late 20’s) and it’s worth slightly less than that today. i’m not the panicky type and i won’t go to cash overnight, but times like this makes me wonder why continue to contribue when my salary/bonus is dependent on this industry. i don’t know what my point is. i guess i just wanted to share and get other peoples thoughts. does anyone here take their earnings/bonuses and keep it out of the mkt and diversify into something totally unrelated?
This raises a great point. I worked at a top IB and you could buy their stock at a 15% discount if held for a year. Cant imagine how many people lost their jobs and most of their savings. Dont put your eggs in one basket!
Reading two of JDV’s excellent posts today got me thinking about this and i thought I’d bump this forward b/c I’m curious to here people’s thoughts on how they did things in the past and whether they are revaluating this going forward. “It’s important for people to protect assets when their jobs might be in jeopardy and the economy looks grim. That starts a classic depression death spiral and the usual monetary interventions that smooth out business cycles don’t work to stop it.” The other one was about owning the means of production.
gameday–I see what you’re saying about looking at your job as part of your portfolio. 1500 bps of alpha is hard to pass up though.
Does your firm have any policies preventing you from hedging the shares you’re buying at a discount? I.e., could you simply buy puts on them to protect you for a year until you’re able to sell them outright?
There’s also a holding period usually 30 days in which you can sell your stock .
no_slogan Wrote: ------------------------------------------------------- >i’m not the panicky type and i won’t go to > cash overnight, but times like this makes me > wonder why continue to contribue when my > salary/bonus is dependent on this industry. > Most people in Corporate America are going to have their salary / employment correlated with the stock market. For someone in their mid 20’s, I wouldn’t worry about it as long as you have a decent cash reserve. People who are wealthy or aren’t particularly affected by the business cycles may be able to pick up excess return by holding cyclical stocks. If we were 10 years from retirement I would definitely take a more defensive stance, but when your retirement is 40 years away (as mine is) why worry about it?
This is why I choose to invest in the most discriminating of asset classes…autographed baseballs, cheap wine, and meteorites.
haha what about boy band memorabilia…?