You're assuming people don't sell their RSU when they get them, which is reckless behaviour.
It depends on the amount of risk and diversification you are looking for as well as where you are in your financial career. For example, if you have no college debt, and can afford to live off of your salary alone, leaving RSUs as company stock when they vest is no different than a non-employee buying shares of that stock at the vest price.
Diversification is great but not everyone is in the same financial situation to assume there is a one size fits all rule.
Wrong - if an employee holds stock in the company they work for, they are doubly screwed when things turn for the worse at the company. They lose asset value, and they may lose their job. Its a lousy idea to hold more than a trivial amount of stock in the company that employs you.
The chance of a dev getting the same job with the same comp is suddenly much lower, and will be like that for years, especially if said dev is looking for another job in the Mountain View area.
Google crashing would flood the market with very similar job seekers and would also likely cause FAAN stock prices to tank as well, making their comp much worse in total too.
Sell your RSUs people! :)
People often evaluate personal risk in terms of money when they really should be evaluating it in terms of utility, which can lead to very different results.
The only situation where that makes sense is if you're not only good at whatever job you have, but you're an expert stock picker and you discover through your superior skill that the one stock with the greatest upside is..... your employer!
The argument against your POV is right in your answer: leaving RSUs as company stock when they vest is no different than a non-employee buying shares of that stock at the vest price.
If instead of getting $X in RSUs you got $X in 'bonus' cash every month would you turn around and put it right into your employer's stock? Probably not.
Regardless of how confident you are in your employer, most people's single biggest investment is their job. Correlating your investments and your regular income is making an incredibly narrow bet which is reckless unless you can see the future.
One other reason to hold on to stock instead of selling are taxes: in the case of ESPP, holding on for a year (or sometimes more), it can make a huge difference in the case of heavily appreciated stock.
Completely legal but obviously ethically dubious.
It’s simply undeniable that employees know more than others.
And it’s unrealistic to think that none of knowledge would ever be helpful to better predict the stock price.
For a stock with lots of appreciation, the real bonus is in the stock price appreciation in the 2 year during which the price is locked in.
That part gets taxed at capital gains if you hold the stock long enough.
https://www.mystockoptions.com/content/how-long-must-i-hold-...
Probably is the key word in this statement. There isn't a one size fits all investment strategy so why are we pretending that one exists.
My decisions to invest in the company I work for or my lack of risk aversion could be based on attributes that are unique to my situation and not yours (or others).
> narrow bet which is reckless unless you can see the future.
This is just another way of saying what OP said that I replied to, its not really addressing the point I am making.
For example, what if I have a lump sum of money in the bank so I can afford to make a risky decision like doubling down on my employer. What if I have a dual income house hold and we can afford to do this because even if I lost everything my spouse would account for enough income to cover our expenses. Again, stop prescribing one size fits all advice because investing and finance are extremely diverse because everyones situation is unique.
They are two very different things.
You're going to reply with a chart of the S&P over the last 100 years engaging in the cliche fallacy of thinking that past returns dictate future results.
The only time it really makes sense not to sell an RSU instantly is if there is some extra tax consideration that can be avoided by selling slightly later or some similar benefit.
Stock grants vest over a period of 4 years, and are targeted to equal a certain dollar value at the time of grant. If your grant is supposed to equal say $80K/year of stock compensation at the time of grant, and then 3 years later the stock has appreciated 3x, then your effective stock compensation when your stock vests, assuming you sell it immediately, is $240K. Combined with salary and what was supposed to be a $200K/year total comp package is now $360K/year.
I'm told (by a mortgage specialist at a Silicon Valley Wells Fargo branch) that the big banks often count stock compensation of big public tech companies as income for the purposes of determining how much mortgage you can afford (because you can always just sell it as it vests), so this increase in average income is absolutely reflected in housing prices.
That’s incredibly ignorant that without knowing people’s situation, you brush it off as reckless behavior.
This might be the case that OP is thinking about.
But if then the stock goes down, you simply decide to not buy a house at that price.
I definitely don’t sell my ESPP shares when I get them, mostly for tax reasons.