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What should you do with stock options during a recession?

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Re: What should you do with stock options during a recession?

#141

Post by indecisive_user »

whakim wrote: post #135
bradlys wrote: post #129

Earlier quoted context omitted.

If you think they're lottery tickets - pick a better startup. Seriously. You shouldn't be joining startups unless you think they have a chance of liquidation for you. If you really do think they're worthless THEN JOIN FAANG.

The average time to exit is something like 8-10 years right now. Are you suggesting you can pick the startups founded over the last year or two that are going to have a big IPO in 2030?

Even if you magically knew which startups could be viable 8 years down the road, there's tons of factors completely outside your control that could tank a startup in an instant; e.g. covid, a world war, regulation, etc.

That "carpool as a service" startup might have had a great business strategy up until a pandemic showed up. And if you're spending 8-10 years waiting for a payoff, you only get ~3 shots to pick correctly.

Re: What should you do with stock options during a recession?

#142

Post by subroutine »

sunsunsunsun wrote: post #116
maerF0x0 wrote: post #55

> If you leave the company, your options will expire if you don’t exercise them. Let me repeat that: if you leave the company, your options will expire if you don’t exercise them. The exact timeline of how quickly they expire depends on option type and company policy, but the termination window is commonly as short as 90 days. So, exercising your options enables you to actually own what you helped build. This is why…

That first article sure is funny. 10% to the first 10 employees... my current employer gave me roughly 0.001% in stock options and I'm employee #5.

Was that like 100 shares?

Re: What should you do with stock options during a recession?

#143

Post by 8note »

shshshd wrote: post #60
johnchristopher wrote: post #2

I'd like to know what to do with ~10 000 euros, right now. Where should I put it so it doesn't lose its value and keep a bit with inflation ? edit for a bit of context: Western Europe, renting, unlikely to be able to buy/invest into a house/flat, looking at gold ingots, not the nerve for crypto.

10k is not that much money. I know it takes a lot of effort to save, but its small change. If you have somewhere to store it, buy consumable goods. - Several hundred dollars each of tuna, prosciutto, a wheel of Parmesan, jerky, rice, flour. - If you have an oil/wood heater fill up the tank. If gas buy plenty of wool sweaters. - If you have to drive to work, get a scooter. - If you live in Czechia, or Finland, (you're…

If I want a lot of tuna, I'm going dumpster diving at a sysco.

Same with flour, really

Re: What should you do with stock options during a recession?

#144

Post by zht »

rrdharan wrote: post #122
bergenty wrote: post #109

Earlier quoted context omitted.

Can someone explain to me why stock options are better than RSUs?

If you get ISOs (not NQSOs) and you early-exercise them such that the spread is $0 (or at least negligible/low) and you correctly file an 83b and the IPO or exit is more than two years from date-of-grant and one year from date-of-exercise, then you can get the more favorable long term capital gains tax treatment on the generated income from the exit event. That’s a lot of conditions, so IMO they don’t make all that m…

you can early exercise nqsos too...

Re: What should you do with stock options during a recession?

#145

Post by JumpCrisscross »

8note wrote: post #130
bradlys wrote: post #115

Earlier quoted context omitted.

This is a bad take. If you truly value options at $0 then you’re often getting a garbage deal wherever you go. If you’re only negotiating over salary - you’re screwing yourself. Options is how you actually make money at startups. The salary is only enough to make sure you can afford to exercise your options regularly and not starve to death in an extremely HCOL area. If you value options at $0 - just join FAANG and n…

Valued at $0 because thats what theyll be treated as when the founders and moneyed investors get paid out first. Sure, options are how you get rich from a startup, but you dont get rich at a startup by working for one, only by being a founder or an investor. That's why I work at a FAANG:P startups exist to screw their employees

> you dont get rich at a startup by working for one, only by being a founder or an investor

I’ve written small (<$50k) Series A cheques into companies where employee no. 20 made more than I did. That’s fine. They invested a hell of a lot more and put much more on the line. Options shouldn’t be counted on. They’re high risk. But no need to be that cynical. Plenty of people want the ones they were in the trenches with to win big when they do.

Re: What should you do with stock options during a recession?

#146

Post by vishnugupta »

johnchristopher wrote: post #2

I'd like to know what to do with ~10 000 euros, right now. Where should I put it so it doesn't lose its value and keep a bit with inflation ? edit for a bit of context: Western Europe, renting, unlikely to be able to buy/invest into a house/flat, looking at gold ingots, not the nerve for crypto.

You haven't said what your time horizon is and risk appetite. i.e., For how long do you not need this money and what % of capital are you OK to risk without which it's almost impossible to advise you.

That said; during times of uncertainty cash is king so my advise is to keep it in a time deposit for 6-8 months and wait for the markets to stabilise.

Based on yesterday's fed FOMC guideline they believe there's still a long way to go before they tame the inflation and they are likely to raise interest rates as high as 4%. I don't know if markets have priced 4% in yet or not. All this is to say next 8-10 months are going to be extremely choppy/volatile.

Once you see signs of stability and recovery you can enter equity markets through DCA.

Re: What should you do with stock options during a recession?

#147

Post by RexM »

8note wrote: post #130
bradlys wrote: post #115

Earlier quoted context omitted.

This is a bad take. If you truly value options at $0 then you’re often getting a garbage deal wherever you go. If you’re only negotiating over salary - you’re screwing yourself. Options is how you actually make money at startups. The salary is only enough to make sure you can afford to exercise your options regularly and not starve to death in an extremely HCOL area. If you value options at $0 - just join FAANG and n…

Valued at $0 because thats what theyll be treated as when the founders and moneyed investors get paid out first. Sure, options are how you get rich from a startup, but you dont get rich at a startup by working for one, only by being a founder or an investor. That's why I work at a FAANG:P startups exist to screw their employees

That’s a new one for me, what’s the P?

Re: What should you do with stock options during a recession?

#148

Post by todd3834 »

I worked at a unicorn startup for about 1.5 years. It started to become clear to me that I probably wasn’t going to make a comparable income to what I was making before in a public company so I left. I exercised my shares. A year later they went public through a SPAC. the shares got a hair cut through the SPAC ratio. Total comp was still really bad but shares were locked up for 6 months or so (maybe longer I don’t remember). I couldn’t sell them and now that I can the total value is under $4,000. I paid over $1k exercising them which felt like an insane bargain.

Maybe it will work out better for some of you though. I feel like if you are not extremely passionate about a startup and you are not one of the original founders… great place to learn and build your career but don’t think it will make you rich

Re: What should you do with stock options during a recession?

#149

Post by jokethrowaway »

johnchristopher wrote: post #2

I'd like to know what to do with ~10 000 euros, right now. Where should I put it so it doesn't lose its value and keep a bit with inflation ? edit for a bit of context: Western Europe, renting, unlikely to be able to buy/invest into a house/flat, looking at gold ingots, not the nerve for crypto.

Mortgage to buy properties overseas you can afford. Fractional ownership of real estate.

Alternatively keep cash.

Re: What should you do with stock options during a recession?

#150

Post by vishnugupta »

anon291 wrote: post #23

I'm planning on exercising some of mine (in the post-resignation 90 day period) via EquityBee. I don't want to lower my own cash reserves now due to a looming recession, but do believe the company has upside. EquityBee (and a few other companies, like vested, all of whom I think are legitimate) gives me money to exercise the options in exchange for ~30% of the shares should the company go public, plus repayment of th…

That's interesting. Do EquityBee cover for your tax liability too?
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