I am firmly against investing in a company you work for. Why? Because you believe in the company probably more than regular investors. You work there, you buy into the company mentality. You often assume you know more about the company than other people. Also because you work there you often believe in the product and it's potential. And you often turn a blind eye to competitors and faults of the company. Why?
You work there. If you were not a believer why work there. Why dedicate yourself to the company.
Last year DH cajoled me into keeping his company stock because he really believed in the company. Personally, I wanted to sell and thought that it was a bad idea to invest anything in the company. So what happened? We lost about 50% on the stock and had to pay taxes on the original amount. It was given to use as company stock at $45 and dropped to $24.
I'm a pretty conservative investor, give me an index fund and I'm happy. DH loves big gains and his mom always hypes individual stocks. But recently she's finally taken my advice (and Warren Buffet's from 9/07 Money magazine), that index/ETF mutual funds are teh way to go. I guess we'll see how a year goes and she may yell at me or not. I think not.
Right now, we're in the position of rebalancing our portfolio and making choices for the end of the year. I want to get out of his company stock finally and dump it. I don't think it has potential for going up and I believe the risk (beta) is high it could tank.
So the question now is do we dump our position in his old company (he left for other reasons), or hold onto it in his 401k? We've left the 401k alone for now, but I'd love to consolidate it into his current position. But in order to do so we'd have to dump his company stock, which he really feels is going up.