In this interview, the host (Speaker A) and Nolan discuss the challenges faced by employees who hold large positions in their employer’s stock. They identify two groups: those whose stock has fallen (underwater options, ESPPs) and those whose stock has risen dramatically and may be at risk of a pull‑back. Nolan stresses that emotional attachment clouds judgment and recommends seeking an independent, outside expert opinion. He likens the reaction to losing stock value to the four stages of grief, noting that many employees only accept loss after substantial damage. The conversation underscores that making investment decisions based on emotion is a losing strategy, and advocates for a deliberate, intentional approach to managing concentrated stock risk.
Chapters
So Nolan, markets have gotten a little squishier over the last few months. We know there are a lot of employees out there holding company stock and they're facing difficult choices right now. There are people who are in a couple of different situations. So there's one, there are people whose company stock has fallen. So they're sitting underwater in those stock options or ESPP or whatever stock plan they hold. And then there are also people who are holding stock that is it's very much appreciated and they're worried that it might fall back if the market pulls back. What do you say to people in both of those camps?
You have some really some soul searching to do and you should get an opinion that's outside of yourself. What we find is employees that are owning company stock tend to have an emotional attachment that really makes them not good judges of whether they need to own more or less of that stock. So the first thing they need to do is call in an outsider or an expert to give them an independent opinion.
I'm going to tee you up with an easy one, Nolan. What do you think about making emotional decisions about your investments?
That's really not a winning strategy. It hasn't been, and I don't know that it will be in the future. I'm reminded of our time in the '90s when we had that tech boom and we had all those executives come in. With these company stocks. And what you see is, as the stock starts to lose altitude, they go through the 4 stages of grief. They don't get to the acceptance until, you know, they're almost wiped out, right? And right now, you're right, we have these 2 groups. We have the groups from the winning stocks that continue to win, like the AR hardware memory stock, Apple. And they need to decide whether they want to keep their chips on the table or start to take some off. Yeah, then we have the winners that were winning, but now they're losing, and they need to decide, hey, my stock was here, now it's here. Do I get out now or wait till we go here? And then we have the investors that are with the losers that continue to lose. Tough place to be. In either case, an independent opinion outside of themselves is not made emotionally will probably be a better decision-making framework.
So knowing if You're one of these people out here sitting on a bunch of company stock and you're feeling some kind of way, whether it's overly exuberant or you're feeling down in the dumps. Get in touch with somebody like us and let's talk about a strategy that's a little bit more intentional and not so emotional.
