Taking Assessment of My Portfolio in 2006, Part 5: Company Ownership

I decided to review my holdings of my employer (IBM) separately from the rest of my taxable investments. I have both a small amount of options and regularly participate in the company's ESPP. In 2006, the stock valuation went from $82 to $97 over the course of the year. This led to a very succesful investment in 2006.

 

12/31/2005

12/31/2006

Contributions

Return

RoR

Dietz

Options

$ -

$ 3,040.00

$ -

$ 3,040.00

N/A

N/A

ESPP

$ 29,501.35

$ 27,523.29

$ (8,013.88)

$ 6,035.82

20.46%

23.68%

Total

$ 29,501.35

$ 30,563.29

$ (8,013.88)

$ 9,075.82

30.76%

35.60%

Note: The -$8k contribution is the sum of an ~$18k stock sale and regular bi-weekly participation in the ESPP.

Its clear the success I had in my IBM ownership is the 2nd main factor for my significant gains in 2006. Even though I had a terrible year last year from such great exposure to the company my loss was negated by this years success. I have basically broken even over the past 2 years.

I took a big step this year in my first action to reduce my exposure to the company, but its not enough. I need to regulary sell ESPP stock to prevent my portfolio from become more overweight in company holdings.


December 2005 Net Worth

$206,990

Part 1: 2006 Retained Earnings

+$65,579

Part 2: 2006 Retirement Accounts

+$17,504

Part 3: 2006 Cash Accounts

+ $1,426

Part 4: 2006 Investment Accounts

+ $7,951

Part 5: 2006 Company Ownership

+ $9,075

Part 6: 2006 Rental Property

 

December 2006 Net Worth

$317,904

Related in Net Worth Archive:

May 2012 Net Worth Update (-$28,098) (Jun 10, 2012) Highlights for MayWe like to take advantage of 0% APR balance transfers and other credit card offers for free money. We are actively looking at taking advantage of new credit card arbitrage opportunities. Our properties are listed on our...

April 2012 Net Worth Update (+$2,763) (May 09, 2012) Highlights for AprilWe like to take advantage of 0% APR balance transfers and other credit card offers for free money. We are actively looking at taking advantage of new credit card arbitrage opportunities. We received $1,000+ in rewards cash...

March 2012 Net Worth Update (+$22,032) (Apr 11, 2012) Highlights for MarchWe like to take advantage of 0% APR balance transfers and other credit card offers for free money. We are actively looking at taking advantage of new credit card arbitrage opportunities. We are close to earning ~$1,000...

Comments (11)


I am jealous of your IBM stock benefit.
Here's some recent action in my investments:
http://finance.webaplex.com/01/mutual-fund-under-performance/

What software or website do you use to make and/or track your finance information? Also how do you make your tables show up so clean on your blog. I'm having a heck of a time trying to get them to work without having them overlap my sidebars :-P

As of 2-7-07 Vanguard REIT Index Fund has a YTD
of 13.10%. I own part of that fund.

2mil, i asked some questions about RE in your first segment. I'm really surprised that you can retain $65k of your earnings. Here is a copy from my earlier comment:

(quote)The second interesting point is the downpayment for the house. Did this money come directly from your paycheck? As you are using the RE term, RE is the excess money you brought in working that didn't go towards paying the bills. (Technically if you were a real biz, RE would be whatever was left over that you could reinvest into the biz after you paid the bills and paid the dividends. So this would include investment returns.). In anycase, if the down payment came from stocks, then this isn't really part of your RE, right? it should be considered just moving the money from one pocket to another. (end quote)

Does that $65k number still make sense?

Another thing. Is there a chance that you can skin your comments better? it'd be great if you could alternate the colors or something.

Just a thought

mlathe,

If you look closer at that $65k number - this is all money that was retained from earned income (with teh exception of $18k which was my pension vesting). It was money I saved from my earned income (it went into cash, savings, retiement, real estate downpayments, etc). I did draw on my savings accounts for the down payment on my new property, but they were replenished aboved and beyond by the end of the year. Make sense?

I agree technically all money retained (earned or passive) should go in this bucket....

FYI: There is a site called NetworthIQ, that you can enter this information, and they'll track it for you.

I have to say that I really appreciate your openness with regards to your finance. The detail you provide is amazing.

Company exposure is very important to take into consideration. I work for a company that can have pretty significant swings in price (energy) and as a result I can often be quite heavily weighted in company shares. I also have stock options that are tied to the share price so that can really multiple things when I become vested on those options. I treat the company shares like I do all my other investments - try to limit no one position to be no more that 10% of the entire portfolio. If this happens then I readjust.

Smart move liquidating the ESPP stock on a regular basis. The last thing you need is to accumulate a large amount there and have it make a sharp turn down before you can get out.

$2m, do you receive a discount on stock purchase? A friend of mine does. He basically sells the stock very shortly after receiving it, hoping to benefit more from the discount than from appreciation.
His thinking is that his employment income is enough exposure to his firm.
Regards, makingourway

I have also been pondering the amount of exposure to my company stock lately. I get a 15% discount at purchase, but unlike the poster above, I try to hold past the 'short term' capital gains mark to limit the tax. The problem is that between splits and DRIPs and being with the company over 10 years now, my employer stock % is approching 25% of my taxable investments - far over my comfort level.

The only thing holding me back is that I am not 100% sure of how/where to reinvest. I'm looking at options, but do need to move on this soon. Thanks for the reminder.

Post a comment

(Comment moderation enabled.)

About 2millionblog.com

A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,574,185

Sponsors

New Personal Finance Articles




PF Blogs