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Stock Advice
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BarryP
Dec 4, 17 12:54
Post #1 of 11 (871 views)
I work for a large engineering company the size of General Electric. They just offered a stock package:

I can buy up to $700 of company stock a month, and they will match 1 share to every 3 shares I buy. IOW, if I buy $8,400 worth of stock this year, they will match it with $2,800.

Assuming that my wife and I are already in good financial position (low debt, lots of equity, good net worth, 401k's maxed, big chunk of $ in the bank), any reason why I wouldn't want to go ahead and max this out?

Looking at historical trends, it more or less follows the market. Its a little below the peak before the bubble burst, but I see no reason for impending disasters.
-----------------------------Baron Von Speedypants
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Re: Stock Advice [BarryP] [ In reply to ]
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windywave
Dec 4, 17 12:56
Post #2 of 11 (866 views)
What's the lock up on it?
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Re: Stock Advice [BarryP] [ In reply to ]
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summitt
Dec 4, 17 13:09
Post #3 of 11 (829 views)
Probably not the worst strategy given it sounds like you have a fairly diversified portfolio and assets. I always recommend to clients at least get the match, whether it's 401(k) or deferred comp - free money. Industrial companies will do well given the uptick in global growth.
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Re: Stock Advice [BarryP] [ In reply to ]
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oldandslow
Dec 4, 17 13:12
Post #4 of 11 (823 views)
How long do you have to hold it? My wife has to hold it for a year. If you can swing it, max it out, and then sell your shares as they become available (unless it was Apple/Google/Amazon a decade ago, then you should have held it).
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Re: Stock Advice [BarryP] [ In reply to ]
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jmh
Dec 4, 17 13:12
Post #5 of 11 (822 views)
You get 33% return guaranteed... not too many places to put your money do that.

Assuming the other stipulations are reasonable and you have confidence in your company to continue its performance trend (and it doesn't try to follow GE's stock trend), it sounds like a good idea to me*.

*(you get what you pay for in free advice)
Suffer Well.
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Re: Stock Advice [jmh] [ In reply to ]
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Leddy
Dec 4, 17 13:15
Post #6 of 11 (808 views)
Quote:
You get 33% return guaranteed

Depending on when it's frees up I wouldn't call it a guaranteed return.

Said another way, he's buying company stock with built in 33% downside protection.
"I think I've cracked the code. double letters are cheaters except for perfect squares (a, d, i, p and y). So Leddy isn't a cheater... "
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Re: Stock Advice [Leddy] [ In reply to ]
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MikeH in MD
Dec 4, 17 13:19
Post #7 of 11 (797 views)
Yeah, depends on the fine print.

When I worked for a big data processing company, we had a stock buy plan where you would buy a certain number of shares over a two year period at the lesser of the price when the plan started or when the plan ended, minus 15%. I thought that was pretty good. Sounds like if you don't have any restrictions or hold time, it's free money.
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Re: Stock Advice [Leddy] [ In reply to ]
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ajthomas
Dec 4, 17 13:23
Post #8 of 11 (789 views)
25% actually:

3 shares at $100 = $300 invested + $100 of free stock = $400 value
$400 loses 25% = $300 of value or amount invested.

But that is a great way of looking at it.
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Re: Stock Advice [ajthomas] [ In reply to ]
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SH
Dec 4, 17 13:49
Post #9 of 11 (752 views)
ajthomas wrote:
25% actually:

3 shares at $100 = $300 invested + $100 of free stock = $400 value
$400 loses 25% = $300 of value or amount invested.

But that is a great way of looking at it.


Losing and gaining from a percentage standpoint aren't symmetrically similar phenomenon. For example, if you start with $100 and your stock losses 90% one day, and then gains 90% the next day, you are -- unfortunately -- not back to $100.

Edit: In conclusion the instananeous return would be 33%.
Last edited by: SH: Dec 4, 17 13:51
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Re: Stock Advice [SH] [ In reply to ]
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ajthomas
Dec 4, 17 14:43
Post #10 of 11 (699 views)
I cannot tell if you are simply replying to me, but my calculation was to the downside.
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Re: Stock Advice [SH] [ In reply to ]
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Leddy
Dec 4, 17 15:26
Post #11 of 11 (665 views)
Quote:
Losing and gaining from a percentage standpoint aren't symmetrically similar phenomenon. For example, if you start with $100 and your stock losses 90% one day, and then gains 90% the next day, you are -- unfortunately -- not back to $100

^^^^ this is why leveraged funds are not meant to be held long term and are more for trading
"I think I've cracked the code. double letters are cheaters except for perfect squares (a, d, i, p and y). So Leddy isn't a cheater... "
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