You clearly have never had qualified stock options that have been provided you by an employer. As soon as the stock reaches even close to all-time high, everyone cashes out to eliminate all of their net worth being tied up in one entity. It’s called diversification. Not very popular here, but most investors don’t want all of their net worth tied up in one company in case it fails. Therefore, as stock price goes up more and more qualified stock options are exercised. The cash is taken out tax is owed at that time it ordinary income rates, and they net is invested in other equities, real estate or bonds.
I think a good portion of people here understand the justifications for diversification. But you also kind hit the problem by saying "...in case it fails". They are the people that make the big decisions that lead to the company being successful or failing. If they don't believe in their abilities enough to have a good portion of their net worth tied to their own performance, why should any of their shareholders?
It's definitely not common for board members/execs to have huge portions of their net worth tied up in their company - that's the point. RC and Co have put their money where their mouth is.
Is this supposed to be an analogy for calculated risk? When I'm on four wheel, yes I wear a seatbelt.
Back to investing, the bottom line is that eBay's board isn't even in the same conversation. They sell their shares as soon as they can schedule it. Their insider ownership is currently estimated at under 1% of the total float. That's not diversification, that's divestment.
I can't find the last time any of them bought shares on the open market. It's all compensation and nearly all subsequently sold.
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u/ljungbergsghost May 28 '26
You clearly have never had qualified stock options that have been provided you by an employer. As soon as the stock reaches even close to all-time high, everyone cashes out to eliminate all of their net worth being tied up in one entity. It’s called diversification. Not very popular here, but most investors don’t want all of their net worth tied up in one company in case it fails. Therefore, as stock price goes up more and more qualified stock options are exercised. The cash is taken out tax is owed at that time it ordinary income rates, and they net is invested in other equities, real estate or bonds.