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Shopify lets staff decide cash-stock pay mix as shares dive

bloomberg.com

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Re: Shopify lets staff decide cash-stock pay mix as shares dive

#281

Post by shard »

Thrymr wrote: post #217
shard wrote: post #206

Earlier quoted context omitted.

To be more general, RSUs are preferable if the stock goes up higher relative to other investments that the grantee could have picked , and cash is preferable if the stock performs worse than other investments that the grantee could have picked. For example, if the stock rises but performs worse than an index fund, then the grantee would have been better served to have gotten cash and put it into a no-effort index fun…

Not true, because the cash would be distributed over time (as increased salary or bonus) as well, not a lump sum up front available for investment.

Still true if the investment made with the cash distributed over time performs better than the RSUs granted lump sum up front.

Re: Shopify lets staff decide cash-stock pay mix as shares dive

#282

Post by bumby »

UncleMeat wrote: post #74
bumby wrote: post #26

Earlier quoted context omitted.

Isn't this dependent on timing and isn't part of the point of DCA to mitigate timing risks? E.g., If I loaded my 401k just before the bottom fell out of the market, you need a much higher proportion of good years to dig out from that hole. With DCA, you would have a shallower hole to climb out of. (Possible I misinterpreting what you meant, or that I am just not financially saavy enough to chime in)

But on average the market goes up. You can lose with lump sum investment as early as possible. But you will be more likely to lose by waiting and only slowly purchasing in. The value of DCA is in emotional regulation since it softens swings at the cost of reduced expected value.

Doesn’t this ignore the asymmetry in risk? The colloquialism is that a bull climbs the stairs and a bear jumps out the window. Implying there’s much more downside risk to bad timing than upside potential. Is there work on a risk-based comparison between the two?
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