51–60 of 205 posts
My questions about the viability of Uber aside, I stick to the story I've heard repeated in many forms "executives sell shares for any number of reasons, but only buy for one reason". Accordingly I don't put much meaning behind stories about an executive selling.
What would be the only one reason for executives to buy?
That's to be expected. He was ousted from the company, has no control now so there's little reason why he should be bullish on a stock run by other people. Plus, the future isn't so clear and the markets are at all time highs and he has other company that may require liquidity in the coming years. Better be in cash.
I would also add the state of the market right now is favorable for sellers. Might as well strike when the market is hot and people will gobble his stocks up without any issues. Considering an impending recession, it just makes sense he would dump these now.
That's to be expected. He was ousted from the company, has no control now so there's little reason why he should be bullish on a stock run by other people. Plus, the future isn't so clear and the markets are at all time highs and he has other company that may require liquidity in the coming years. Better be in cash.
I would also add the state of the market right now is favorable for sellers. Might as well strike when the market is hot and people will gobble his stocks up without any issues. Considering an impending recession, it just makes sense he would dump these now.
Earlier quoted context omitted.
Although you make a good point about general portfolio diversification, the difference between a "normal" employee and a co-founder is fairly large in this instance. Co-founders are supposed to have confidence in the business they built - if they don't, why should other investors?
> Co-founders are supposed to have confidence in the business they built - if they don't, why should other investors? But what's in it for the co-founder? Usually it's that they have lots of power over the company, e.g. being a CEO, and have more freedom than someone who still has to prove that they deserve that power. Jeff Bezos for example "only" owns 100 billion USD but controls a 800 billion USD company, with the…
One example is people who actually own mansions generally live in a relatively small space inside. You can only really use one room at a time and walking around takes time.
From TFA: > The 43-year-old’s remaining stake in the ride-hailing company now constitutes about a fifth of his $3 billion fortune, according to the Bloomberg Billionaires Index, down from about 75% before the lockup. To be fair, if I had 75% of my net worth in a single asset, I'd also try to diversify. My wife and I both have lots of stock in the companies we work for, due to RSUs and employee stock purchase programs…
Although you make a good point about general portfolio diversification, the difference between a "normal" employee and a co-founder is fairly large in this instance. Co-founders are supposed to have confidence in the business they built - if they don't, why should other investors?
However, going from 75% to 20% means that something changed, and that's not a good sign
Earlier quoted context omitted.
Although you make a good point about general portfolio diversification, the difference between a "normal" employee and a co-founder is fairly large in this instance. Co-founders are supposed to have confidence in the business they built - if they don't, why should other investors?
I don't agree with this logic: you can be confident but prudent. Self-confidence leads to bias, I wouldn't consider it a bad sign that the co-founder stays prudent. However, going from 75% to 20% means that something changed, and that's not a good sign
Earlier quoted context omitted.
True, but those two are actual billionaires while their companies are floundering (Uber much less so than WeWork, but still - 37% down since IPO isn't great). I can't think of many other examples where the company is doing so poorly and the co-founders made off with $1B+, given that this was not an acquisition. Maybe a better title would be "Getting to a Billion without Long-Term Viability or Acquisition".
> 37% down since IPO isn't great basically every company drops from their IPO. indexes and funds and such don't include them for months (6? or more?) in order to give that a chance to settle out.
That's to be expected. He was ousted from the company, has no control now so there's little reason why he should be bullish on a stock run by other people. Plus, the future isn't so clear and the markets are at all time highs and he has other company that may require liquidity in the coming years. Better be in cash.
the markets are at all time highs Isn't the world economy built on the idea that markets will always go up? Every year should be an all time high, otherwise we're in recession which is (apparently) tragedy to be avoided at all costs, no?
The 'business cycle' of expansion and contraction is obviously visible in history and has reasonable macroeconomic explanations, and it's expected to continue.
People try to predict the timing of it (which is hard because acting on these predictions often alters reality so that they're less likely to come true), and they definitely try to ensure that recessions aren't long and hard and that the economy can recover from them faster, but nobody is saying that they can prevent a recession, and the interventions which can artifically postpone a recession (i.e. postpone a correction of some market) would generally only make the recession much worse when it happens.
Earlier quoted context omitted.
Although you make a good point about general portfolio diversification, the difference between a "normal" employee and a co-founder is fairly large in this instance. Co-founders are supposed to have confidence in the business they built - if they don't, why should other investors?
I don't agree with this logic: you can be confident but prudent. Self-confidence leads to bias, I wouldn't consider it a bad sign that the co-founder stays prudent. However, going from 75% to 20% means that something changed, and that's not a good sign
TLDR: Most of your net worth in a single stock is insane.