xdfa wrote:I understand the concern for the 30% in company stock. It is a very safe stock, to a point that I actually feel as safe as a bond fund. It weathered through the recession really well. I would not contribute less than the max limit for contribution.
I realize we are just a bunch of random, anonymous internet posters here, now let me give you some real examples of safe, blue chips with a decent dividend that have weathered the test of time but have inevitably been through a few hiccups throughout the years:
Proctor & Gamble - hit a hiccup back in 1994 - earnings miss, and then panic, like it was really going to go out business
- made no difference, the stock got cut in half in the span of months, all the retirees in Cinncinati, Ohio were having heart papiltations - they had the bulk of their retirement money in the stock and it was still paying the dividend, they never cut it - the stock eventually recovered and went on to more than double.
ExxonMobil - some say it's like a bank, with a fortress balance sheet, decent dividend, hard assets in the ground still waiting to be found and pumped. Exxon Valdez - is that enough? Took a few years, stock tripled from there.
British Petroleum - 17 billion barrels of oil in the ground, the stock is like a pariah, trades at book value, they elimnated the dividend for 3 quarters, then reinstated it, have been raising it like clockwork, even after placing $40 billion in reserves for court costs, the stock is still down 50%, doesn't matter how many billions they make each quarter.
The point is - you can have a very viable business, a fortress balance sheet, fantastic cash flow, be on the Fortune 10 - you fall into animal spirits, and it doesn't matter what you think, believe, feel - it only matters what everyone else is doing, if it's you versus the crowd, guess who wins usually in the short term/mid term? Now, do you really feel like risking 30% of your networth in just 1 (one) company? You're young, but not that young to have recalled these two names - Bear Stearns - used to trade for $160 a share; I knew someone who had over $150,000 in the retirement plan - I begged them to get the heck out of it, way before the crisis. I get a phone call a day after they closed their doors, the person was still holding it - they were cashed out by JP Morgan for $8,000. Lehman Brothers - zero or was it a $1?
Unless it's Apple stock that you bought at a $1, and even then I'd lighten up, just ask those who bought it at $730 a share how it feels.