Thursday, October 16, 2008

(stock market) investment advice

Yay, stocks are falling lately but this is not quite about it, it's about you silly and me (or something I inferred/learned about late 2001 or maybe during 2002)

Never hold stock or invest in the company that employs you.

The logic is rather simple: if something goes wrong and the stock sinks, you're in for a double fingering: once from the stocks you own and a second time (royally) might be from your own employer (you know, yada yada, cutting corners, streamlining, saving toilet paper, etc)

Of course, there are some caveats:
  • you are the company that employs you, in this case the answer is obvious
  • you are working for a startup in which your input/work really contributes to the output; well usually high risks can bring high benefits, IF... your gut feelings are in charge/shape
  • I never said you shouldn't play that stock in your advantage :-)
  • you got stock options for your nice eyes or hard works, just one word: sell
But you don't have to take my word on it, just look at one BusinessWeek from September 2008, page 94, in red: Keep your portfolio investments in sectors that don't have the same economic risks as your company and industry.

PS. It's one of the core rules in investment: diversify!

Now, I've been reading some inept isights about the current market situation and the basic idea was: hold your positions. Don't be stupid, square in your losses and dump (if you haven't done it already), exit from this madness, let the big guys hold their horses/positions. (no investment advisor will openly tell you to dump, because that can really bring down the whole show/sky)

PPS. but, I'm not an investment advisor, so use common sense, your IQ and your gut feelings :-)