Tech stock share price falls

vacheron

MeteredOut said:

Cobbler_tone said:

The only way I ‘play’ the market is with my company shares. £90 net a month for £300 worth of shares. Started buying at £30 and now £70, it’s a no brainer, plus the dividends add up. Tax free after 3-5 years.
Some people I work with long service are on £30k a year and have £150k worth of shares if they haven’t touched them. I don’t stress about the prices as whenever you sell them you are quids in, unless the bottom totally fall out of them which is unlikely. Company schemes are great benefits.
No CGT either if sold whilst with or when leaving the company.

When I hear these stories, I always share a caution about the people i knew who had spent 10+ years at RBS putting money into their employee share purchases scheme, many ready to use it for an early retirement.

95% of their investment was wiped out in 2008, and its only recovered a fraction of that since.

I knew someone who worked for Northern Rock. They only worked there for a few years, so weren't hit too badly, but many lost everything (including their jobs) and there were many confirmed stories of older staff members on low wages, but who had six figures invested in NR shares (some as an alternative to funding their pensions) because they felt part of a family and were constantly told by the higher ups and those they trusted that it was the best thing to do.   

That cautionary tale aside, I still hold a considerable amount of my company stock aquired via SAYE schemes and some on the open market. My previous tranche was £30K at a £5.20 option price and my current ongoing scheme on maturity will be another £30k at a £7.29 option price. Currently trading at £19.79.

I constantly remind myself that I need to diversify these, but it's easier said than done, especially when the growth remains steady.   

 

Gary1984

In Ian Fraser's book 'Shredded' about RBS he talks about them encouraging lower wage employees and long time retail customers to buy shares in the latest issue whilst knowing the bank was probably insolvent. Really sickening stuff. Amazing nobody ever went to jail.

Moonwolf

vacheron said:

MeteredOut said:

Cobbler_tone said:

The only way I ‘play’ the market is with my company shares. £90 net a month for £300 worth of shares. Started buying at £30 and now £70, it’s a no brainer, plus the dividends add up. Tax free after 3-5 years.
Some people I work with long service are on £30k a year and have £150k worth of shares if they haven’t touched them. I don’t stress about the prices as whenever you sell them you are quids in, unless the bottom totally fall out of them which is unlikely. Company schemes are great benefits.
No CGT either if sold whilst with or when leaving the company.

When I hear these stories, I always share a caution about the people i knew who had spent 10+ years at RBS putting money into their employee share purchases scheme, many ready to use it for an early retirement.

95% of their investment was wiped out in 2008, and its only recovered a fraction of that since.

I knew someone who worked for Northern Rock. They only worked there for a few years, so weren't hit too badly, but many lost everything (including their jobs) and there were many confirmed stories of older staff members on low wages, but who had six figures invested in NR shares (some as an alternative to funding their pensions) because they felt part of a family and were constantly told by the higher ups and those they trusted that it was the best thing to do.   

That cautionary tale aside, I still hold a considerable amount of my company stock aquired via SAYE schemes and some on the open market. My previous tranche was £30K at a £5.20 option price and my current ongoing scheme on maturity will be another £30k at a £7.29 option price. Currently trading at £19.79.

I constantly remind myself that I need to diversify these, but it's easier said than done, especially when the growth remains steady.   

 

I sold most of my BT shares but kept £30k in the ISA. 

I then sold some, keeping the money in the ISA and bought others to diversify. I bought Persimmon which did very well and fortunately I took the profit after they had doubled.  I have Next, Whitbread and particularly Experian which have done well.  I also have Lands Security, Marstons and ABF which haven't done quite so well. 

However because I diversified at £3 when I'd paid 61p, and the BT shares are now around £1.40, and I have moved over £20k to cash, mostly from dividends and selling off half the shares once they doubled, overall I am am probably about OK. 

Now I am retiring it feels a bit too risky to have £30k in single picks.

vacheron

Gary1984 said:

In Ian Fraser's book 'Shredded' about RBS he talks about them encouraging lower wage employees and long time retail customers to buy shares in the latest issue whilst knowing the bank was probably insolvent. Really sickening stuff. Amazing nobody ever went to jail.

Our tenuous claim to financial fame was that we once rented a 3 storey townhouse in the Newcastle area in 2007 which it it later transpired was owned by the then mistress of Northern Rock CEO Adam Applegarth. 

Despite being in her mid 30's at the time and on a £30K salary, "Northern Rock" had somehow saw fit to lend her over £1,000,000 worth of mortgages split over 5 different houses, including her flat, the house we were renting, and three other properties, most of which were 100% LTV or interest only... she must have had a very influential guarantor! 

Based on the price she paid to buy the house we were renting just 12 months before we rented it, and the interest rates at the time, our rental payment wouldn't  have even covered the interest on the mortgage.

We moved out in late 2007 around the same time Applegarth resigned from NR, and the 2008 subprime crash was just around the corner. I often wonder how things worked out for her after that?

QrizB

Cobbler_tone said:

AlanP_2 said:

Tell that to the employees of Digital Equipment Company (DEC) back in the 90s. Second largest IT company in the world behind IBM with over 100k employees many of whom had significant holdings in DEC shares.
Worth peanuts when they went bust and added to the loss of income and the fact that those who had the most in company shares were typically the oldest and the ones who struggled to get new employment during a tech downturn and you had a perfect storm.

That's the exception rather than the norm. ... It is a low risk bet to make tens of thousands of pounds in most established companies after a few years service.

It's generally suggested here on the Pensions board that investing in single company shares rather than some sort of broad-based fund is a dangerous strategy, so I'd challenge your assertion that it's "low risk".

Choosing to make that sort of investment in the same company that employs you is just compounding the risk. All your eggs are in one basket.

If you're treating it as a "bet" rather than an investment, and only staking money that you're happy to kiss goodbye to, that's a different matter. But most of us wouldn't put tens of thousands on a horse in the 1430 at Kempton Park, and most of wouldn't choose to invest that much in a random SME that we just happened to be employed by.

Cobbler_tone said:

Our shares have grown 5%-10% every year for the past 30+

That period includes the dot-com bubble and the GFC. Whatever business you've been invested in, it's exceptional to have made positive returns throughout.

Cobbler_tone

QrizB said:

Cobbler_tone said:

AlanP_2 said:

Tell that to the employees of Digital Equipment Company (DEC) back in the 90s. Second largest IT company in the world behind IBM with over 100k employees many of whom had significant holdings in DEC shares.
Worth peanuts when they went bust and added to the loss of income and the fact that those who had the most in company shares were typically the oldest and the ones who struggled to get new employment during a tech downturn and you had a perfect storm.

That's the exception rather than the norm. ... It is a low risk bet to make tens of thousands of pounds in most established companies after a few years service.

It's generally suggested here on the Pensions board that investing in single company shares rather than some sort of broad-based fund is a dangerous strategy, so I'd challenge your assertion that it's "low risk".

Choosing to make that sort of investment in the same company that employs you is just compounding the risk. All your eggs are in one basket.

If you're treating it as a "bet" rather than an investment, and only staking money that you're happy to kiss goodbye to, that's a different matter. But most of us wouldn't put tens of thousands on a horse in the 1430 at Kempton Park, and most of wouldn't choose to invest that much in a random SME that we just happened to be employed by.

Cobbler_tone said:

Our shares have grown 5%-10% every year for the past 30+

That period includes the dot-com bubble and the GFC. Whatever business you've been invested in, it's exceptional to have made positive returns throughout.

As a 40% tax payer, does the 'risk' lessen somewhat that I am buying £300 worth of shares every month for £90?
I'd certainly back my own company (one of the most successful in the world) than go and play the stock market with my £90.

QrizB

Cobbler_tone said:

As a 40% tax payer, does the 'risk' lessen somewhat that I am buying £300 worth of shares every month for £90?

The risk isn't in the buying, it's in the keeping beyond the minimum period.

Cobbler_tone said:

I'd certainly back my own company (one of the most successful in the world)

People said that about Enron, and WorldCom, and DEC.

Cobbler_tone

QrizB said:

Cobbler_tone said:

As a 40% tax payer, does the 'risk' lessen somewhat that I am buying £300 worth of shares every month for £90?

The risk isn't in the buying, it's in the keeping beyond the minimum period.

Cobbler_tone said:

I'd certainly back my own company (one of the most successful in the world)

People said that about Enron, and WorldCom, and DEC.

You keep pointing out the exceptions rather than the norm. The vast, vast, vast majority of employees will be happily taking the advantage of company share schemes and reaping the benefits. In my 32 years I am yet to hear of anything other than people making significant gains from doing so in ours. I certainly don't hold onto all of mine and over the years have funded new cars, paying down property and holidays across the years for a fraction of the 'real' cost. Those who have never sold them are retiring years earlier.
That is without the £1,500 of dividends that go back in each year. 
I can guarantee that there is no other investment available to match the performance.

On the flip side, if the shares were a penny tomorrow, the most I could have lost as a maximum is £1,000 a year. It is a great bet. I certainly don't rely on them as part of my future financial planning. They'll be a nice bonus....all tax free on redundancy or retirement.

Kynthia

Cobbler_tone said:

QrizB said:

Cobbler_tone said:

AlanP_2 said:

Tell that to the employees of Digital Equipment Company (DEC) back in the 90s. Second largest IT company in the world behind IBM with over 100k employees many of whom had significant holdings in DEC shares.
Worth peanuts when they went bust and added to the loss of income and the fact that those who had the most in company shares were typically the oldest and the ones who struggled to get new employment during a tech downturn and you had a perfect storm.

That's the exception rather than the norm. ... It is a low risk bet to make tens of thousands of pounds in most established companies after a few years service.

It's generally suggested here on the Pensions board that investing in single company shares rather than some sort of broad-based fund is a dangerous strategy, so I'd challenge your assertion that it's "low risk".

Choosing to make that sort of investment in the same company that employs you is just compounding the risk. All your eggs are in one basket.

If you're treating it as a "bet" rather than an investment, and only staking money that you're happy to kiss goodbye to, that's a different matter. But most of us wouldn't put tens of thousands on a horse in the 1430 at Kempton Park, and most of wouldn't choose to invest that much in a random SME that we just happened to be employed by.

Cobbler_tone said:

Our shares have grown 5%-10% every year for the past 30+

That period includes the dot-com bubble and the GFC. Whatever business you've been invested in, it's exceptional to have made positive returns throughout.

As a 40% tax payer, does the 'risk' lessen somewhat that I am buying £300 worth of shares every month for £90?
I'd certainly back my own company (one of the most successful in the world) than go and play the stock market with my £90.

Buying them makes financial sense. However once you're at the point you're allowed to sell them while retaining the gains from the scheme, you should do so. Then you use the funds to invest according to a strategy and risk profile you would have done regardless of where the money came from.

It's extremely high risk to have so much money invested in a single company, and even more risky when you're income is reliant on that company.

Cobbler_tone

Kynthia said:

Cobbler_tone said:

QrizB said:

Cobbler_tone said:

AlanP_2 said:

Tell that to the employees of Digital Equipment Company (DEC) back in the 90s. Second largest IT company in the world behind IBM with over 100k employees many of whom had significant holdings in DEC shares.
Worth peanuts when they went bust and added to the loss of income and the fact that those who had the most in company shares were typically the oldest and the ones who struggled to get new employment during a tech downturn and you had a perfect storm.

That's the exception rather than the norm. ... It is a low risk bet to make tens of thousands of pounds in most established companies after a few years service.

It's generally suggested here on the Pensions board that investing in single company shares rather than some sort of broad-based fund is a dangerous strategy, so I'd challenge your assertion that it's "low risk".

Choosing to make that sort of investment in the same company that employs you is just compounding the risk. All your eggs are in one basket.

If you're treating it as a "bet" rather than an investment, and only staking money that you're happy to kiss goodbye to, that's a different matter. But most of us wouldn't put tens of thousands on a horse in the 1430 at Kempton Park, and most of wouldn't choose to invest that much in a random SME that we just happened to be employed by.

Cobbler_tone said:

Our shares have grown 5%-10% every year for the past 30+

That period includes the dot-com bubble and the GFC. Whatever business you've been invested in, it's exceptional to have made positive returns throughout.

As a 40% tax payer, does the 'risk' lessen somewhat that I am buying £300 worth of shares every month for £90?
I'd certainly back my own company (one of the most successful in the world) than go and play the stock market with my £90.

Buying them makes financial sense. However once you're at the point you're allowed to sell them while retaining the gains from the scheme, you should do so. Then you use the funds to invest according to a strategy and risk profile you would have done regardless of where the money came from.

It's extremely high risk to have so much money invested in a single company, and even more risky when your income is reliant on that company.

You should sell them (at the latest) once you leave to avoid tax and CGT. As for before that, it totally depends on timing. 5 years ago they were £30, now they are £60 (plus dividends) and grow each year give or take. That’s without the £10k lump sum when we recut the company. Like I said, it’s minimal outlay and less than what some spend at Starbucks. I let mine build up and take some occasionally. If they were worth nothing tomorrow I’d be quids in. That in itself removes it immediately from ‘high risk’. In fact any pension pot in the land will be higher risk. 
The lived example is that you will struggle to find many who contribute and you won’t find any that have lost out.
I like being a shareholder, it’s great for employee discretional effort. It’s a lot more stable than investing in AI or Bitcoin.
It’s basic maths. 5 years ago my £90 (£300) bought 10 shares. Today they are worth £600. I could sell them tax free today for £600 or next week for £550-650 maybe. People often ask if they should wait for a couple more pounds on the price, I always advise they will be waiting forever and remind them how much they cost.

If the ‘risk’ is that they could be worth 10p then we’ll all have far bigger worries than some company shares! It would be far bigger news than McDonalds or Starbucks going bust overnight….and it is not tech.

I totally get the point of removing that ‘risk’, hence why I used it to prevent borrowing, interest or just have fun. I don’t know anyone who uses it as a core investment strategy and people see it ‘free money.’…apart from the top dogs with share options and million pound dealings.

As for having it where you are employed. They can happily pay me off.