Thursday, September 14, 2006

Diversification, again

I came across a blog I found interesting:

He discusses some topics I wish I had exposure to several years ago.

But I'm practically screaming, "Are you crazy?!! Sell, sell, sell!!!!!!"

I guess the author probably has ~$30 million or more concentrated in company options, and doesn't want to sell because of capital gains taxes. For some reason, he seems to think his company is invincible (must be a Google employee :P ). I have seen enough over the years (especially during the dotcom crash) that I wouldn't be comfortable to be 100% invested in company options. It's true that to achieve extreme wealth financially, you have to be focussed rather than diversified. But to not diversify once you hit $30M, or even $10M, is just plain folly. What do you think?

Enron and WorldCom both seemed invincible at one time.


MillionDollarCountDown said...

Couldn't agree with more. The only financial mistake I did NOT make was selling my options in 2000. Lucky timing.

mOOm said...

It's not options but actual stock. I am guessing he was one of the founders of the company he works for. He specified that his wealth is more than 260 times his current salary. He must have at least $50million I would think. Maybe a lot more depending how senior his position is. $30million is the usual definition for UHNW. Even if the stock fell 90% he would still be rich.... maybe that's his thinking.

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