[hinkley]

I’m pretty sure that people who say things like, “if I’d have invested $10k in Apple in 2008 I’d be a millionaire” are so far from right that they aren’t even wrong.

Nobody holds on to a winning lottery ticket that long. You cannot exit at the top and trying to do so will drive you crazy.

I think you and your friends were right. I had a coworker that was selling his stock as fast as he could and it finally dawned on me that he was doing the right thing. When you work at a place, you are investing your time an energy into an idea. If you hold stock in that place, you aren’t diversified.

If the stock tanks, layoffs are more likely to happen. And then you are broke and jobless. There are very few companies you can work for where your own stock is the best bet on the stock market, and second best is often pretty darn good. Gamble on a different income stream.

[asdfman123]

My friend made a fortune with Ethereum because he bought in early and forgot his password.

When it got up to around 700, he started to get frantic, figured out how to crack his own password, and sold it all.

He's from an Indian family so poor that they didn't own any books growing up, and he made in the low seven figures. But if he had known his password, he probably would have sold it early for like $10k.

[ruvis]

I sold 500 eth for 12$ a piece after the drop from 20$ and felt like a genius.

Mind you, I make about 30k after tax. (Not in US)

[shifto]

I remember selling 1 BTC so I could buy an AMD Radeon 290x to mine even more. Still have about .5 BTC left and just can't part with it.

[noodle]

> Nobody holds on to a winning lottery ticket that long. You cannot exit at the top and trying to do so will drive you crazy.

The only people that do hold on to a winning lottery ticket that long are the people for which that $ would not significantly change their lives.

I bought AAPL at ~$20 pre iPhone, AMZN at ~$50. And sold them when I doubled or tripled my money. The only reason the choice to sell those looks stupid is hindsight. I'm still happy I sold, because I'm not independently wealthy. I used that $ for good purposes that impacted my life at the time. I cashed out for an immediate, excellent ROI instead of risking it.

Edit: If I find myself in a position at a startup where I could liquidate shares for a currently fair $ despite the strong potential for growth in value over time, I probably would, in order to de-risk the situation. I'd sell some and keep some.

[spurdoman77]

There is no right or wrong, it also comes down to personal preferences. Many seriously rich people probably havent been diversifying that much.

Also, a middle ground is possible. Sell some of the stock for safety, and take risk with the rest.

[fastball]

"Seriously" rich people got lucky.

You shouldn't bet on getting lucky.

[SubuSS]

That's focusing on a small % of rich.

Even to keep among the 'rich' list assuming you inherited it all takes enormous talent because money inflates away.

There may be a bigger incidence of luck (I am not sure of this either btw - almost all the contacts you get as a rich person are very much the effect of you being rich) but unless you're well prepared to take full advantage of it, there will be no returns.

What I will concede though: Luck when you're poor might mean securing a week of food. Luck when you're a billionaire probably means the stock market goes on a 15 year bull run.

[dareobasanjo]

There is zero talent involved in investing such that you beat inflation. Inflation rate hovers between 1% - 3% per year. Stock market returns hover between 5% - 10% per year for fairly conservative choices like an S&P 500 index fund.

There is nothing luckier than being born rich. Treating it as some sort of skill to remain rich is part of the dysfunction in US society where wealth is equated with virtue & character.

[SubuSS]

Right - that is moving the goal posts though: This was talking about being in the top x% of the rich. If you don't keep working at it, you will drop off that list pretty quick. It is pretty much a slippery slope when you don't know how to manage money. And there is probably a very very miniscule portion of the top 1% of rich who live on index funds. When you're that rich - these don't work the way it works for us.

I did acknowledge the luck part in being rich. I do acknowledge it is far better than being poor. But if you want to remain rich and ensure your generations remain rich, that's a ton of work.

PS - seriously rich might mean different things for us though :)

[dennisgorelik]

I prefer to being born smart over being born rich.

If you are rich, but not smart -- it is hard to avoid temptation to invest into risky projects. It is hard to identify people who just want to drain away your money.

[geitir]

"Enormous talent?". How about a good investment firm and a high paying job because your status automatically grants you a 6 figure salary. It's extremely easy to be rich and stay rich in the us of a

[bakuninsbart]

Since you're focusing on "normal" rich people: One of my best friends is smart but was extremely unwise when he was young.

Did a lot of drugs, didn't pay attention in uni, didn't work, didn't build the habits of a successful person. Still, he got one chance after another, and in his late 20s he actually did. From what he told me, realizing how insanely privileged he is was one of the major influences for him to change.

But still, a normal person would have been long out of chances at that point, and would fight serious debt and worklessness without any support.

You maybe cannot afford to be a total wanker forever as a rich person, but you certainly have a lot more leeway in your wankiness.

[SubuSS]

I definitely agree - luck runs out faster than money when you're poor. Or the chances will be to secure basics rather than your future.

[spurdoman77]

Well I don't like when people tell me what I should do or not. Also when it comes to gambling. And I also see nothing wrong if someone likes to gamble. Better wirh stocks than with something where you are statistically guaranteed to lose money, like lottery.

[ultraluminous]

You are statistically guaranteed to have worse expected value as a retail stock trader than at the blackjack table.

[dd36]

Huh? You’re highly unlikely to go to zero making trades.

[ultraluminous]

I have no idea what you base this statement on. You are absolutely likely to go to zero by continuously making market trades as a retail investor. Every trade has two sides and the side you're trading against is for the most part significantly better informed than you. That's why Robinhood makes its money by selling their 100% retail order volume.

[ceejayoz]

The same is true for Blackjack. The house has a 0.5% edge if played properly, so as long as you're not making bets that are most of your capital, it'll take a long time to go bankrupt.

Meanwhile, trading stocks on margin...

[throwaway_bad]

Tech stocks outperformed market even when market was on a historical bull run. This might not (and probably won't) hold true in the future but it does bias all our current anecdotal samples.

I think the FAANG people I know who supposedly make 500k/yr only got to those numbers by never selling a single share and then reporting total net worth including appreciation divided by time worked. Their base salary isn't actually that crazy. People who sell all their shares for index funds didn't do as well.

[SubuSS]

I am guessing this isn't what you wanna hear but, They don't do a post hoc calculation.

It is usually the salary + stock award that will vest over 4 years. For most companies with a flat vest, the total will come to 500k/yr for certain levels.

The appreciation is all yours. Future perf bonuses which will be each 6 months or a year are on top of this. Some companies do adjust for what you're making in that year and cut down the perf bonus (In a previous company I once got a promotion without any stock because our stock had tripled in the time...) - but these companies have a serious growth outlook. Once the stock flattens, there will be a major drain and they know this.

[2rsf]

> Tech stocks outperformed market

On average over a long period, but in this case you are invested in one company over a very specific entry date and period of time, with some critical periods blocked from selling.

Facebook peeked around the end of July 2018 at 209$, if you got stocks then you might be in trouble, or already sold out after seeing 124$ during December 2018.

[skinnymuch]

Some people supposedly working for Netflix have total comp mostly in cash within $100K of the $500K figure you put out. But of course if other companies total comp isn’t that good in future, Netflix won’t have any reason to give out that much cash salary either if it’s true.

[saryant]

Seriously rich people, yes.

But comfortably rich? You’re more likely to get there with diversification than concentration.

[spurdoman77]

I dont really see the difference, wealth is wealth. Also what is enough money varies from person to person. In a low income country you can retire nicely on couple of millions, somewhere else you need ten millions to have a nice house and lifestyle.

Whether you want to take bigger or smaller risks is up to the person in question.

[suls]

Exactly this. Best to cash out immediately. If you are serious about investing, then build a diversified portfolio. This might include your employer but certainly at a much lower asset allocation rate.

[quickthrower2]

I think this is true for most middle class people, because as soon as you have say $100-$200k you don't want to keep 'betting' and you'd rather put that into a house deposit or pay off the mortgage.

However if you are already a millionaire you might as well keep holding it.

A reason why the rich can get richer, because by holding you get tax-free reinvestment of the current value. By selling you pay tax and then get to use it for something else. This plus average stock returns beating other investments or paying off the mortgage.

Exception is with crypto and 'true believers' who held and held. Maybe they'll never sell their entire stash.