For some reason having my house referred to as "my single largest asset" always grated me. I guess it was because the people that made that statement usually were trying to sell me something I really didn't want.
When one of my holdings finally exceeded the value of my house, I took great pleasure in that. However, this holding kept growing and growing and I couldn't do anything about it. Normally, that would be a good thing, but not necessarily in this case. That holding was my employer's company stock.
I have never purchased a single share of my company's stock. I have accumulated it through my company's 401(k) matching contribution and long-term incentive awards (stock options, performance shares, restricted stock, etc.) Below are the percentages of my company's stock to my total portfolio for the last five years (at December 31st):
- 2003 35%
- 2004 32%
- 2005 40%
- 2006 46%
- 2007 42%
How did I get in this situation? Below are the circumstances that led me here:
- Until a few years ago, employees were not allowed to move their 401(k) company-match out of company stock.
- Given my position in the company and access to material non-public information, I am considered an insider, thus I can only trade in legally prescribed windows (usually four per year).
- For much of the last five years I was prohibited from trading during these window due to being in possession of material non-public information relating to acquisitions and divestitures.
- Greed and inertia. My company's stock usually outperforms the S&P, I had become complacent in letting it grow over the years unchecked.
I spent 20+ years getting into this situation. Here is my 5-year plan for correcting it. I plan to systematically lower my exposure to my company's stock to these target percentages:
- 2008 40%
- 2009 35%
- 2010 30%
- 2011 25%
- 2012 20%
I am curious, what percent of your total portfolio is your company's stock?