The number one reason for folks who won the "IPO lottery" is they fail to cash out/diversify their stock, and at some point in the future the stock price drops dramatically.
For example, during the 2001 tech boom/bust a lot of tech companies went bankrupt in a very short period of time. As a result a lot of tech employees saw the value of their stock/options drop to zero (effectively). The speed in which the bust happened caught a lot of people off guard.
It is generally a good idea to move at least some of that money into a diversified portfolio as soon as possible. But folks often put this off because they don't want to pay the cap gains taxes and/or they think the stock will keep climbing.
I guess I did the right thing: Atlassian IPOed in 2015 at $21, despite everyone suggesting to cash out, I wasn’t interested, and I sold only since 1 year between $180 and $320, and kept 1/3rd. BUT it keeps climbing, $480, so you aways feel like you’re missing something, whether you sell or not.
There is no right way of doing it, you’ll never sell at the top. At least the right moment is when you can use the money for a project.
qqqwerty|4 years ago
For example, during the 2001 tech boom/bust a lot of tech companies went bankrupt in a very short period of time. As a result a lot of tech employees saw the value of their stock/options drop to zero (effectively). The speed in which the bust happened caught a lot of people off guard.
It is generally a good idea to move at least some of that money into a diversified portfolio as soon as possible. But folks often put this off because they don't want to pay the cap gains taxes and/or they think the stock will keep climbing.
laurent92|4 years ago
There is no right way of doing it, you’ll never sell at the top. At least the right moment is when you can use the money for a project.
tonyedgecombe|4 years ago