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4 Lessons on When to Sell $400,000 Worth of Stock in an Unpredictable Market
Tools and pearls of wisdom for framing and managing risk; knowing when to sell stock and when to hold; and keeping emotions at bay.
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My friend, Matt emailed me on a Friday afternoon. He had just “come into” 4,500 shares of stock in a hot software company, Siebel Systems — a $450,000 windfall!
A startup company he used to work for had been acquired by Siebel. It was entirely unexpected, but Matt’s stock from the startup would be converted into Siebel stock and was going to be worth something.
Matt wanted to ask for my advice about buying stock options as insurance in case Siebel’s stock price went down. The Siebel stock would be deposited into his brokerage account three days later on Monday morning.
We made plans to meet for lunch on that Monday.
But it was clear to me that he had asked the wrong question.
Quick background
Matt (not his real name) had just finished graduate school a few years earlier. He…
