How much AAPL stock can I keep?

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pnw_guy
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How much AAPL stock can I keep?

Post by pnw_guy »

I'm an Apple employee in my early 30s. Here are a couple of other details:
Household income - $400K
Networth - $700K in stock (70/30 US and International Total Stock Market) and $200K home equity

I have access to an ESPP at Apple. Here are the details: Employees may purchase the company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of six month offering periods. An employee’s payroll deductions under the plan are limited to 10% of the employee’s compensation and employees may not purchase more than $25,000 of stock during any calendar year.

My question is how much Apple stock might be reasonable to keep in my portfolio? I really like the idea of keeping the shares I purchase via the ESPP. I really believe in the company and what we're doing, though I know the conventional wisdom is to sell RSUs and the like. But if I really wanted to keep some shares, what should be the upper bound?

Would love any input or advice.
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Re: How much AAPL stock can I keep?

Post by Grt2bOutdoors »

No more than 5% of investable assets in any one company. For you though, we can make an exception and say 10% of your portfolio value. There's no hard stop, but if you don't want to have all of your eggs in one basket 10% is the most I personally would go in any one company.
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mrpotatoheadsays
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Re: How much AAPL stock can I keep?

Post by mrpotatoheadsays »

pnw_guy wrote: Wed Jan 05, 2022 10:11 pm My question is how much Apple stock might be reasonable to keep in my portfolio? I really like the idea of keeping the shares I purchase via the ESPP. I really believe in the company and what we're doing....
Zero. I thought the same when I worked at Enron.
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Re: How much AAPL stock can I keep?

Post by nisiprius »

I worked for a once-famous Fortune 400 high-tech company which dominated the market in a product category from 1972 to about 1983. It collapsed with stunning rapidity in the early 1990s, during the three years I worked there. (No, no, no, it wasn't my fault!)

I didn't actually want any company stock, but feared, rationally or irrationally, that if I didn't participate in the ESPP at all, my boss would know and think I was disloyal. So I signed up for the minimum monthly purchase. When I joined, the stock was at $14/share. When I was let go in a mass layoff the stock was down to $3/share and sinking fast. I didn't bother to do anything about it. Less than two years later the company declared bankruptcy. I had two physical stock certificates and I kept one as a souvenir and sold one to a scripophily dealer for $9.95. All told I lost about $300, and of course the loss coincided with my losing my job.

Obviously the loss of $300 was trivial.

But the point is that stuff like this happens. If I had had $30,000 or $300,000 in company stock, losing it at the same time as I lost my job would have been quite painful.

I can't tell you what the percentage should be, but you should decide it on the assumption that you really might lose virtually all of it at the same time as you lose your job. I know Apple looks invulnerable now, but so did GE.

John C. Bogle's suggestion was that if you could not resist gambling in individual stocks (which is what you are doing, even if it's Apple), it should be done in a separate "funny money" account and limited to 5% of your total. For whatever reason, 5% is a common number for this sort of thing. If you can't do that, just be sure that you are seriously considering the possibility of losing virtually all of it, and quite possibly at the same time as you lose your job.
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pnw_guy
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Re: How much AAPL stock can I keep?

Post by pnw_guy »

nisiprius wrote: Wed Jan 05, 2022 10:32 pm John C. Bogle's suggestion was that if you could not resist gambling in individual stocks (which is what you are doing, even if it's Apple), it should be done in a separate "funny money" account and limited to 5% of your total. For whatever reason, 5% is a common number for this sort of thing. If you can't do that, just be sure that you are seriously considering the possibility of losing virtually all of it, and quite possibly at the same time as you lose your job.
The interesting thing is that depending on Apple's market cap (I'd have to check), I might already have 5% via my US total stock market index....
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Re: How much AAPL stock can I keep?

Post by lainvestor »

I am an Apple employee and I keep 30% of my stock portfolio in Apple and my wife’s company- she joined recently so most of the stocks are Apple) and rest in Total stock market index fund.
This forum is going to suggest you to keep it 0 or below 10%. You should decide what you are comfortable with it. Most of my colleagues are >50% in Apple stocks and very happy with it till now. My boss is 15% in apple stocks ( he is ex Cisco and has gone through dot com burst). Most of us rebalance in April and October when rSUs vest.
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Re: How much AAPL stock can I keep?

Post by pizzy »

pnw_guy wrote: Wed Jan 05, 2022 10:38 pm
nisiprius wrote: Wed Jan 05, 2022 10:32 pm John C. Bogle's suggestion was that if you could not resist gambling in individual stocks (which is what you are doing, even if it's Apple), it should be done in a separate "funny money" account and limited to 5% of your total. For whatever reason, 5% is a common number for this sort of thing. If you can't do that, just be sure that you are seriously considering the possibility of losing virtually all of it, and quite possibly at the same time as you lose your job.
The interesting thing is that depending on Apple's market cap (I'd have to check), I might already have 5% via my US total stock market index....
Sounds like you have enough then. :beer
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Re: How much AAPL stock can I keep?

Post by KlangFool »

Zero. Do not hold any of your employer stock. You have enough AAPL stock in your Total Stock Market Index fund.

I lost plenty of money in Telecom bust. And, there were plenty of stories of how someone lost most of their portfolio in their employers' stock.

Do not keep most of your eggs in one basket. It is a very bad idea.

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ras4250
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Re: How much AAPL stock can I keep?

Post by ras4250 »

When I was in college in 2006 I started working at Apple in retail. The hourly pay wasn’t much but I maxed out the ESPP at 10%. Looks like the offering hasn’t changed since. I will tell you now that I’m very thankful I did. I still have every share I bought. Haven’t sold a single one. My lowest cost basis shares are up 6,798.55% :D

Of course there is also an Enron type risk or a tech bubble risk where Apple will collapse. Only you can decide what risk that % is. I obviously do not believe that risk is remotely material for Apple.

But at the very absolute least it is a guaranteed return of 15% from the lower point of a 6 month period if you take the shares and then sell (when I was there we could immediately sell after each 6 month period and we were issued the shares). Some periods it could be a huge return. That’s guaranteed money. There is no reason not to max it out at 10% and then you can decide how many shares you want to keep or just sell. The only possible risk is a complete collapse of the stock of more than 15% the day after the shares are issued. Infinitesimally small.
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Re: How much AAPL stock can I keep?

Post by pnw_guy »

ras4250 wrote: Wed Jan 05, 2022 10:55 pm When I was in college in 2006 I started working at Apple in retail. The hourly pay wasn’t much but I maxed out the ESPP at 10%. Looks like the offering hasn’t changed since. I will tell you now that I’m very thankful I did. I still have every share I bought. Haven’t sold a single one. My lowest cost basis shares are up 6,798.55% :D

Of course there is also an Enron type risk or a tech bubble risk where Apple will collapse. Only you can decide what risk that % is. I obviously do not believe that risk is remotely material for Apple.

But at the very absolute least it is a guaranteed return of 15% from the lower point of a 6 month period if you take the shares and then sell (when I was there we could immediately sell after each 6 month period and we were issued the shares). Some periods it could be a huge return. That’s guaranteed money. There is no reason not to max it out at 10% and then you can decide how many shares you want to keep or just sell. The only possible risk is a complete collapse of the stock of more than 15% the day after the shares are issued. Infinitesimally small.
I am 100% participating in the company ESPP. The question is whether to immediately sell for a small and almost assured gain or whether to keep the shares.
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Re: How much AAPL stock can I keep?

Post by Starfish »

What is the tax treatment? I would hold as much as necessary to get the lower tax rate.
I see no problem with having 20% of the portfolio in Apple at your age. Even in the very unlikely case that it goes to 0, it is not going to kill you.
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pnw_guy
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Re: How much AAPL stock can I keep?

Post by pnw_guy »

lainvestor wrote: Wed Jan 05, 2022 10:50 pm I am an Apple employee and I keep 30% of my stock portfolio in Apple and my wife’s company- she joined recently so most of the stocks are Apple) and rest in Total stock market index fund.
This forum is going to suggest you to keep it 0 or below 10%. You should decide what you are comfortable with it. Most of my colleagues are >50% in Apple stocks and very happy with it till now. My boss is 15% in apple stocks ( he is ex Cisco and has gone through dot com burst). Most of us rebalance in April and October when rSUs vest.
I'm not exactly sure what the right percentage is for me but 50% feel way too high.

The other thing is that even if I max out the ESPP of 10% of my salary, we invest so much on an annual basis that it still isn't going to be that much of our portfolio.
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Re: How much AAPL stock can I keep?

Post by er999 »

An Individual stock will maximize the possibility of getting rich but also can go to zero. It depends on how much risk you want to take. Obviously bogleheads say <5-10% and that is the prudent way to get rich slowly and preserve what you already have. Hard to say what’s right. Looks like apple stock tripled in the past 3 years, won’t happen with an index.
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Re: How much AAPL stock can I keep?

Post by Activesloth »

My portfolio is 12% AAPL (around 3,350 shares). I don’t know if that’s too much. I invested in AAPL because I really liked the products, and I use them. For some peace of mind, I have 60% of my portfolio in VOO (S&P500), just in case something bad does happen to Apple. I’m comfortable with this allotment, but some investors may not be.
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Re: How much AAPL stock can I keep?

Post by lainvestor »

pnw_guy wrote: Wed Jan 05, 2022 11:12 pm
lainvestor wrote: Wed Jan 05, 2022 10:50 pm I am an Apple employee and I keep 30% of my stock portfolio in Apple and my wife’s company- she joined recently so most of the stocks are Apple) and rest in Total stock market index fund.
This forum is going to suggest you to keep it 0 or below 10%. You should decide what you are comfortable with it. Most of my colleagues are >50% in Apple stocks and very happy with it till now. My boss is 15% in apple stocks ( he is ex Cisco and has gone through dot com burst). Most of us rebalance in April and October when rSUs vest.
I'm not exactly sure what the right percentage is for me but 50% feel way too high.

The other thing is that even if I max out the ESPP of 10% of my salary, we invest so much on an annual basis that it still isn't going to be that much of our portfolio.
You are going to get more RSUs as you grow in the company. ESPP will be tiny fraction of RSUs. As someone said Individual stocks have risks, you should decide what % you are comfortable with.
I have a colleague who has lost most of his money in a company called Conexant systems during dot com burst and another colleague who hasn’t sold a single Apple stock since 2006 and can buy an Island if he wants to. So it can go either ways.
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Re: How much AAPL stock can I keep?

Post by tomsense76 »

So you mentioned conventional wisdom. Yes with RSUs and ESPPs it is to sell immediately. IOW what this does is this locks in the discount and then you can invest in index funds per normal. Most bogleheads do this.

If you choose to hold the stock, know that you are taking on idiosyncratic risk. This is true of any single stock. As others have pointed out above, with a company you work for you are taking on the additional risk that your employer runs into hard times, which could mean losing your job and some of your savings at the same time.

Supposing that hasn't scared you out of this idea, would suggest coming up with a plan with this stock. How much are you going to put in? When do you decide to take money out? Etc.

Also would spend a bit more time understanding the ESPP. For example does it have a lookback? If so, how far? Does your company have blackout dates? When are these relative to when ESPP shares are purchased/available to you to sell? Is there a lockup period and if so how long? Etc.

It is worth spending some time reading up on ESPP taxation. This is more complicated than just buying a stock. Would learn about qualifying and disqualifying dispositions. Would spend some time learning about phantom income (yes you can lose money and pay taxes!).

Would spend some time working through some examples in up and down markets. Also would take a look at how exiting at different times behaves here. This should help put the concepts above in context.

Personally I've deviated from what most bogleheads do and do hold ESPP and sell as soon as shares are qualified adding to my portfolio (that said I'm not recommending it, just sharing how I've approached things). There was a recent thread that discussed another poster's ESPP questions ( viewtopic.php?t=366747 ). Have shared my approach there ( viewtopic.php?p=6427845#p6427845 ). Though think it is worth reading the whole thread as there are several nice perspectives from others.
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Re: How much AAPL stock can I keep?

Post by drk »

lainvestor wrote: Wed Jan 05, 2022 10:50 pm This forum is going to suggest you to keep it 0 or below 10%.
Yes, because that's prudent advice inline with the Bogleheads Investment Philosophy. It might be worth going to check it out, in particular "Never bear too much or too little risk" and "Diversify". The examples of your colleagues and boss sound exactly like the classic cautionary tales about idiosyncratic risk.
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Re: How much AAPL stock can I keep?

Post by tomsense76 »

pnw_guy wrote: Wed Jan 05, 2022 11:12 pm The other thing is that even if I max out the ESPP of 10% of my salary, we invest so much on an annual basis that it still isn't going to be that much of our portfolio.
Already had some thoughts in another comment, but would just add to that a few more things related to this point.

Most companies will have sessions where they explain their ESPP. They may also share spreadsheets and other tools to help you understand how purchases work, how this affects other things in your paycheck, etc. Would ask them for these and play around with them. It will help improve your intuition about how this all works.

Also it's worth understanding the order in which they withhold things in case you make a mistake and overwithhold somewhere (like 401k). How do they make up the gap? For example my employer would reduce my ESPP contributions in this case.

Finally the $25k limit includes the discount. So this is actually less of your paycheck than you might think. IOW it may be closer to $21k. It's unclear how what your salary is (and you don't have to share that), but the $25k limit could have more bearing on how much actually goes into ESPP.
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Re: How much AAPL stock can I keep?

Post by 3funder »

Believe in the company all you want, but don't confuse your vote of confidence with the likelihood of Apple shares outperforming the broad market moving forward. Take Amazon, for example. It too, is a great company, but I wouldn't overweight it for the world at its current share price.
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Re: How much AAPL stock can I keep?

Post by Rick76 »

~18 years ago, I was in a similar situation as OP and I decided to keep my employers stock despite several financial advisors recommended against my ‘heavy exposure’. Today, I am extremely happy I made that decision as the stock allotment from back then grew significantly leading to my financial independence now.

OP has the best visibility of his employers future products and strategy and if truly convinced, I recommend keeping the first few years worth of company stock and then sell off the same amount as new ones come in. Exceptions can be made purchasing a home or other similar key expenses. Good luck!
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Re: How much AAPL stock can I keep?

Post by cascadian »

A nice spot to find yourself in and it all comes down to risk preferences. Apple is a big source of your personal income and already the largest holding in your index funds. The company is in a strong financial position with both dividends and buybacks, so that only further adds to the benefit of your ability to purchase at a discount. But as others have said, be prepared at some point to either sustain a partial or complete loss of value as tech is littered with failed former giants. How much are you comfortable losing in terms of job income & net worth should things turn extremely negative?

Similar exposure to a different large company's ESPP and RSUs, so have taken the approach of using proceeds over the years to eliminate all debt and bank a few years' living expenses. Given these conditions, I'd recommend continuing to participate fully in ESPP and holding at least until you can take advantage of long-term capital gains. Once that happens, occasionally trim ESPP & RSU holdings on a FIFO basis so it is almost a way of dollar cost averaging your way out of what thus far has been a very positive idiosyncratic risk. At that point, keeping 10-25% seems reasonable assuming you are comfortable with a potential substantial loss.
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Re: How much AAPL stock can I keep?

Post by pizzy »

Rick76 wrote: Thu Jan 06, 2022 1:14 am ~18 years ago, I was in a similar situation as OP and I decided to keep my employers stock despite several financial advisors recommended against my ‘heavy exposure’. Today, I am extremely happy I made that decision as the stock allotment from back then grew significantly leading to my financial independence now.

OP has the best visibility of his employers future products and strategy and if truly convinced, I recommend keeping the first few years worth of company stock and then sell off the same amount as new ones come in. Exceptions can be made purchasing a home or other similar key expenses. Good luck!
I understand how it working out for you was nice.

But at OP’s salary level, I don’t think he has the “best visibility” of Apple’s “future products and strategy”.

I just don’t think he’s very high up in the corporate ladder.

Which in my opinion is another reason to keep AAPL to a reasonable %.
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Re: How much AAPL stock can I keep?

Post by chris319 »

Here is one way of looking at it.

The S&P 500 index is considered the gold standard around here. It is comprised of 500 stocks. Any company in the S&P 500 index could go bust. If one does, the index loses (theoretically) 1/500 of its value, or 0.2%. A conservative approach would be to have no more than 0.2% of your portfolio in AAPPL. This amounts to $20 worth of AAPL for every $10,000 in your portfolio and does not take into account any exposure you may have to AAPL through some other investment. How much damage would a 0.2% worst-case loss do to your portfolio? The answer depends on your risk tolerance.
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Re: How much AAPL stock can I keep?

Post by jda »

Keep ESPP for 1.5 years to take advantage of long term cap gain and sell RSU immediately.

ESPP will be a small portion of your portfolio and by keeping some Apple stock, you'll have some skin in the game when most of your colleagues are holding a lot of AAPL.

Sell RSU every April/Oct immediately because it's already taxed, so no tax benefits holding it.
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Re: How much AAPL stock can I keep?

Post by pasadena »

jda wrote: Thu Jan 06, 2022 3:25 am Keep ESPP for 1.5 years to take advantage of long term cap gain and sell RSU immediately.

ESPP will be a small portion of your portfolio and by keeping some Apple stock, you'll have some skin in the game when most of your colleagues are holding a lot of AAPL.

Sell RSU every April/Oct immediately because it's already taxed, so no tax benefits holding it.
ESPP shares are also already taxed. If you sell them immediately with $0 capital gains (assuming the plan allows you to do so), you pay $0 additional taxes, just like RSU shares.
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Re: How much AAPL stock can I keep?

Post by tomsense76 »

pasadena wrote: Thu Jan 06, 2022 3:54 am
jda wrote: Thu Jan 06, 2022 3:25 am Keep ESPP for 1.5 years to take advantage of long term cap gain and sell RSU immediately.

ESPP will be a small portion of your portfolio and by keeping some Apple stock, you'll have some skin in the game when most of your colleagues are holding a lot of AAPL.

Sell RSU every April/Oct immediately because it's already taxed, so no tax benefits holding it.
ESPP shares are also already taxed. If you sell them immediately with $0 capital gains (assuming the plan allows you to do so), you pay $0 additional taxes, just like RSU shares.
I'm not sure how your ESPP program is structured, but at least at my employer the discount is not already taxed (the portion we contribute is). Instead the discount is taxed at sale. Actually they don't withhold for it, but they do report it as income. Not to say that is a good reason to hold them as most cases result in the discount being taxed as ordinary income regardless.
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Re: How much AAPL stock can I keep?

Post by tomsense76 »

chris319 wrote: Thu Jan 06, 2022 2:35 am Here is one way of looking at it.

The S&P 500 index is considered the gold standard around here. It is comprised of 500 stocks. Any company in the S&P 500 index could go bust. If one does, the index loses (theoretically) 1/500 of its value, or 0.2%. A conservative approach would be to have no more than 0.2% of your portfolio in AAPPL. This amounts to $20 worth of AAPL for every $10,000 in your portfolio and does not take into account any exposure you may have to AAPL through some other investment. How much damage would a 0.2% worst-case loss do to your portfolio? The answer depends on your risk tolerance.
Are you meaning an equal weighted S&P 500 index (like what RSP tracks)? If so, that would make sense.

Just mentioning this as traditionally when referring to S&P 500 one is meaning market cap weighted. So stocks that are higher holdings in that index could cause a loss greater than 0.2%. As Apple is near the top according to this weighting and so is closer to 7%. Similarly stocks with smaller cap weight could be less than 0.2%.
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Re: How much AAPL stock can I keep?

Post by pasadena »

tomsense76 wrote: Thu Jan 06, 2022 4:56 am
pasadena wrote: Thu Jan 06, 2022 3:54 am
jda wrote: Thu Jan 06, 2022 3:25 am Keep ESPP for 1.5 years to take advantage of long term cap gain and sell RSU immediately.

ESPP will be a small portion of your portfolio and by keeping some Apple stock, you'll have some skin in the game when most of your colleagues are holding a lot of AAPL.

Sell RSU every April/Oct immediately because it's already taxed, so no tax benefits holding it.
ESPP shares are also already taxed. If you sell them immediately with $0 capital gains (assuming the plan allows you to do so), you pay $0 additional taxes, just like RSU shares.
I'm not sure how your ESPP program is structured, but at least at my employer the discount is not already taxed (the portion we contribute is). Instead the discount is taxed at sale. Actually they don't withhold for it, but they do report it as income. Not to say that is a good reason to hold them as most cases result in the discount being taxed as ordinary income regardless.
You're right, I was a little too fast. The discount is taxed as ordinary income upon selling. There's also a difference in taxation between qualified and disqualified dispositions, but as far as I understood my plan's explanations, it can go both ways, depending on whether the stock goes up or down in the interval.
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Re: How much AAPL stock can I keep?

Post by Wiggums »

I never held my employer stock and the company was extremely stable. Sure, there were rocky times during the great financial crises, etc. I just always converted it to S&P 500. One day, the guards came in and escorted people out of the building. A similar thing happened at my dad’s company. My only point is that you should consider that even the Amazon’s and Apples can fall out of favor or different management can make or break the company we know today. I don’t have a magical number for you and I own Apple products. It’s hard not to love a stock that has done do well. But that’s my point. Too much of a good thing, can be dangerous.

"Companies have short lifespans ... and Amazon will be disrupted one day," Jeff Bezos said.

Asked whether that fact worried him, Bezos replied: "I don't worry about it because I know it's inevitable. Companies come and go, and the companies that are the shiniest and most important of any era — you wait a few decades and they're gone."

Bezos added that he would love for Amazon to out-live him.

Look at the S&P too companies of thirty years ago, how many are top companies today? It’s not just failure you should be concerned about. Products can slowly fall out of favor overtime which will hurt the stock price.
Last edited by Wiggums on Thu Jan 06, 2022 5:55 am, edited 4 times in total.
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Re: How much AAPL stock can I keep?

Post by shess »

pnw_guy wrote: Wed Jan 05, 2022 10:11 pm My question is how much Apple stock might be reasonable to keep in my portfolio? I really like the idea of keeping the shares I purchase via the ESPP. I really believe in the company and what we're doing, though I know the conventional wisdom is to sell RSUs and the like. But if I really wanted to keep some shares, what should be the upper bound?
Something to keep in mind as a tech worker is that OF COURSE you love your employer. Otherwise you'd quit and go work for someone else. So you want to be careful about whether you are really evaluating things with open eyes, or deluding yourself. I worked for a number of tech companies, and something I found interesting is that there were companies I fully hated who I would never work for, and yet sometimes their shares did very well, while there were others I strongly believed in (some of which I worked for) whose shares performed terribly. Some did both. Thing is, I'm a tech worker, not a tech investor or business analyst - it's entirely possible for a company to have a really good technical idea and not be a great business. There have been a LOT of companies I was super enthusiastic about but which failed horribly.

I am not in the camp that says you should hold 0%. I think your feelings about your employer are real, you shouldn't deny them, just make sure you're managing your feelings and not letting them run away with you. I'd say an appropriate amount really depends on what the rest of your portfolio looks like, and how important the employer portion is to your future. To me, your portfolio sounds solid for your age, so I think it's reasonable to hold some employer stock. One approach might be to simply sell half and keep half, so you're always booking at least some profits, and pick a point (like 10%) to reevaluate things.

Something to keep in mind is that if/when things turn, they turn HARD, and everything goes kaput. In the Great Recession, my employer shares lost half of their value in a few months, and we mostly stopped hiring for years. It was better than employer shares losing 90% of value and having layoffs, but it was still a dark time. I wasn't congratulating myself on my diamond hands at the time. Looks to me like AAPL lost a similar amount in the Great Recession, and I recall them losing like 70% or so at one point during the dotcom bust (remembered because my wife was working there at the time and her NQs lost a ton).
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Re: How much AAPL stock can I keep?

Post by MadAsgardian »

shess wrote: Thu Jan 06, 2022 5:43 am I am not in the camp that says you should hold 0%. I think your feelings about your employer are real, you shouldn't deny them, just make sure you're managing your feelings and not letting them run away with you. I'd say an appropriate amount really depends on what the rest of your portfolio looks like, and how important the employer portion is to your future. To me, your portfolio sounds solid for your age, so I think it's reasonable to hold some employer stock. One approach might be to simply sell half and keep half, so you're always booking at least some profits, and pick a point (like 10%) to reevaluate things.
Good post, the knee-jerk Enron talk gets a bit tiresome. My Dad had peers who lost most of their retirement because they put all their eggs in their company's stock basket, but OP is clearly not proposing this.

Disclaimer: I hold a little bit of Apple and Disney just to make life interesting.
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Re: How much AAPL stock can I keep?

Post by wetgear »

pnw_guy wrote: Wed Jan 05, 2022 11:03 pm
ras4250 wrote: Wed Jan 05, 2022 10:55 pm When I was in college in 2006 I started working at Apple in retail. The hourly pay wasn’t much but I maxed out the ESPP at 10%. Looks like the offering hasn’t changed since. I will tell you now that I’m very thankful I did. I still have every share I bought. Haven’t sold a single one. My lowest cost basis shares are up 6,798.55% :D

Of course there is also an Enron type risk or a tech bubble risk where Apple will collapse. Only you can decide what risk that % is. I obviously do not believe that risk is remotely material for Apple.

But at the very absolute least it is a guaranteed return of 15% from the lower point of a 6 month period if you take the shares and then sell (when I was there we could immediately sell after each 6 month period and we were issued the shares). Some periods it could be a huge return. That’s guaranteed money. There is no reason not to max it out at 10% and then you can decide how many shares you want to keep or just sell. The only possible risk is a complete collapse of the stock of more than 15% the day after the shares are issued. Infinitesimally small.
I am 100% participating in the company ESPP. The question is whether to immediately sell for a small and almost assured gain or whether to keep the shares.
Sell immediately for the assured gain and diversify. The worst case scenario for selling it early is you missed out on some extra money you probably won't need in the long run. The worst case scenario of holding too much stock in Apple could be catastrophic. You're doing great, so there is no reason to take the added concentration risk.
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Re: How much AAPL stock can I keep?

Post by TomatoTomahto »

pizzy wrote: Thu Jan 06, 2022 1:53 am
Rick76 wrote: Thu Jan 06, 2022 1:14 am ~18 years ago, I was in a similar situation as OP and I decided to keep my employers stock despite several financial advisors recommended against my ‘heavy exposure’. Today, I am extremely happy I made that decision as the stock allotment from back then grew significantly leading to my financial independence now.

OP has the best visibility of his employers future products and strategy and if truly convinced, I recommend keeping the first few years worth of company stock and then sell off the same amount as new ones come in. Exceptions can be made purchasing a home or other similar key expenses. Good luck!
I understand how it working out for you was nice.

But at OP’s salary level, I don’t think he has the “best visibility” of Apple’s “future products and strategy”.

I just don’t think he’s very high up in the corporate ladder.

Which in my opinion is another reason to keep AAPL to a reasonable %.
And even employees at high levels don’t always have the visibility they think they have. I once worked for a CIO who had been at a serious financial services company as the CIO, presumably with a lot of visibility. He got greedy and kept his RSUs. He even added to them a few weeks before they went on a path to $0. He went from “won the game” to having to continue working for years in a matter of a month. Nice guy, but greedy.
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Re: How much AAPL stock can I keep?

Post by chris319 »

tomsense76 wrote: Thu Jan 06, 2022 5:07 am Are you meaning an equal weighted S&P 500 index (like what RSP tracks)? If so, that would make sense.

Just mentioning this as traditionally when referring to S&P 500 one is meaning market cap weighted. So stocks that are higher holdings in that index could cause a loss greater than 0.2%. As Apple is near the top according to this weighting and so is closer to 7%. Similarly stocks with smaller cap weight could be less than 0.2%.
My bigger point stands. Will an investor have a nervous breakdown over a 0.2% dent in his portfolio. Hopefully not. You scale your position size to the amount of risk you are willing to take if the stock goes bust.
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Re: How much AAPL stock can I keep?

Post by JoeRetire »

pnw_guy wrote: Wed Jan 05, 2022 10:11 pm My question is how much Apple stock might be reasonable to keep in my portfolio? I really like the idea of keeping the shares I purchase via the ESPP. I really believe in the company and what we're doing, though I know the conventional wisdom is to sell RSUs and the like. But if I really wanted to keep some shares, what should be the upper bound?
Keep them all, if you can acknowledge and tolerate the risk involved.
I'm much more comfortable criticizing people behind their backs.
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Re: How much AAPL stock can I keep?

Post by CyclingDuo »

pnw_guy wrote: Wed Jan 05, 2022 11:03 pm
ras4250 wrote: Wed Jan 05, 2022 10:55 pm When I was in college in 2006 I started working at Apple in retail. The hourly pay wasn’t much but I maxed out the ESPP at 10%. Looks like the offering hasn’t changed since. I will tell you now that I’m very thankful I did. I still have every share I bought. Haven’t sold a single one. My lowest cost basis shares are up 6,798.55% :D

Of course there is also an Enron type risk or a tech bubble risk where Apple will collapse. Only you can decide what risk that % is. I obviously do not believe that risk is remotely material for Apple.

But at the very absolute least it is a guaranteed return of 15% from the lower point of a 6 month period if you take the shares and then sell (when I was there we could immediately sell after each 6 month period and we were issued the shares). Some periods it could be a huge return. That’s guaranteed money. There is no reason not to max it out at 10% and then you can decide how many shares you want to keep or just sell. The only possible risk is a complete collapse of the stock of more than 15% the day after the shares are issued. Infinitesimally small.
I am 100% participating in the company ESPP. The question is whether to immediately sell for a small and almost assured gain or whether to keep the shares.
Sure. That's one way to boost your annual income using 10% of your salary.

As you mentioned above, depending on the index fund, Apple hovers around 5 - 6% of the fund. So you already own 5-6% in your funds as it is. Add on the individual shares you own via ESPP and RSU's to calculate your overall AA to Apple. Your human capital income is also coming from Apple, so you should consider that as well.

Not a bad idea to set a percentage limit in your IPS of how much AA you would devote to Apple before trimming some shares and diversifying. JL Collins gave a nice interview at one of the Google employee meetings (a room filled with employees with a lot of Alphabet stock in their portfolios) and talked about diversity and their stock. The same applies to an employee at Apple and their stock. Worth a listen to see what he says and advises regarding company stock.
https://www.youtube.com/watch?v=T71ibcZAX3I

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Re: How much AAPL stock can I keep?

Post by Nowizard »

The question relates to tilting and the amount you choose. That is personal, and you will get varying responses. Focus on the concept of tilting as you view it. That should provide your answer in combination with the responses you receive here that are either analytic or anecdotal.

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Re: How much AAPL stock can I keep?

Post by CRC_Volunteer »

Many of us have horror stories about the rise and fall of corporations. I once worked at the world’s largest insurance software company. Our 401(k) and company match were pretty much company stock.

Through corporate malfeasance, in just a few short years, thousands lost their jobs and the company no longer exists. I would heed the advice of those who have “been there, done that”.
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Re: How much AAPL stock can I keep?

Post by retiredjg »

pnw_guy wrote: Wed Jan 05, 2022 10:11 pm My question is how much Apple stock might be reasonable to keep in my portfolio? I really like the idea of keeping the shares I purchase via the ESPP. I really believe in the company and what we're doing, though I know the conventional wisdom is to sell RSUs and the like. But if I really wanted to keep some shares, what should be the upper bound?
Having both your retirement and your current income dependent on the same entity is super risky. If things go south, you lose not only your current income but also a good chunk of what is set aside for your future. As a couple of posters have mentioned, this does happen and it can and has happened to companies as respected and secure as Apple.

Having said that, I do not think that having a small percentage of your nest egg in your company stock is a fatal flaw....specifically because you can afford to lose it. Others working for Apple (or whatever) may not be able to afford to lose it. For them, it may be a fatal flaw.

You are making a lot of money and already on the road to wealth. You are saving a lot. It sounds like there are two incomes so chances are only one would be lost if the worst happens. You can actually afford to gamble and lose some. If you are comfortable with that, own some company stock. But not a lot.

The limit for me would probably be 5%. I would not be willing to be super risky with more than that.
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Re: How much AAPL stock can I keep?

Post by veggivet »

As much as you want to allow you to sleep at night. Whatever you decide, you are well on your way to financial independence. Congrats!
If you watch your pennies, your dollars will take care of themselves.
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Re: How much AAPL stock can I keep?

Post by Outer Marker »

Well, Warren Buffett has 45% of Berkshire's portfolio in Apple Stock. https://www.cnbc.com/berkshire-hathaway-portfolio/ I might be inclined to make an exception to the 5% rule and "no employer" stock for Apple. Certainly wouldn't go to 45% but 10% might not be unreasonable.
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Re: How much AAPL stock can I keep?

Post by z3r0c00l »

It sounds like you can get up to $25,000 per year no? If I was making half a million a year I would probably just roll the dice and buy the max each year at a decent 15% discount. Worst-case scenario you lose a few hundred thousand late in your career if Apple goes bust against a net worth in retirement of ~$5-10 million. Maybe Apple just matches the sp500 and you only get the 15% bonus which is still a great return. Maybe the best option is to sell as soon as you can at an average gain of 15%, but if you believe in the company and want to own the stock, no big deal. You are on the road to being wealthy and also have a pretty conservative AA overall.
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Re: How much AAPL stock can I keep?

Post by tomsense76 »

pasadena wrote: Thu Jan 06, 2022 5:13 am
tomsense76 wrote: Thu Jan 06, 2022 4:56 am I'm not sure how your ESPP program is structured, but at least at my employer the discount is not already taxed (the portion we contribute is). Instead the discount is taxed at sale. Actually they don't withhold for it, but they do report it as income. Not to say that is a good reason to hold them as most cases result in the discount being taxed as ordinary income regardless.
You're right, I was a little too fast. The discount is taxed as ordinary income upon selling. There's also a difference in taxation between qualified and disqualified dispositions, but as far as I understood my plan's explanations, it can go both ways, depending on whether the stock goes up or down in the interval.
No worries. Yeah the taxation is a bit complicated. Yep weird things can happen like phantom income.
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Re: How much AAPL stock can I keep?

Post by tesuzuki2002 »

mrpotatoheadsays wrote: Wed Jan 05, 2022 10:32 pm
pnw_guy wrote: Wed Jan 05, 2022 10:11 pm My question is how much Apple stock might be reasonable to keep in my portfolio? I really like the idea of keeping the shares I purchase via the ESPP. I really believe in the company and what we're doing....
Zero. I thought the same when I worked at Enron.
Let's be honest here... Apple is NO Enron....
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Re: How much AAPL stock can I keep?

Post by tomsense76 »

Outer Marker wrote: Thu Jan 06, 2022 10:48 am Well, Warren Buffett has 45% of Berkshire's portfolio in Apple Stock. https://www.cnbc.com/berkshire-hathaway-portfolio/ I might be inclined to make an exception to the 5% rule and "no employer" stock for Apple. Certainly wouldn't go to 45% but 10% might not be unreasonable.
This is an interesting observation.

That said, this kind of reasoning gets tricky. For example what should OP do if Warren sells? Generally it can lead to being hyperfocused on what other investors are doing, which may not lead to the best decisions.
"Anyone who claims to understand quantum theory is either lying or crazy" -- Richard Feynman
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Re: How much AAPL stock can I keep?

Post by Ed 2 »

I sold all my only one individual stock position AAPL last year in January and reinvested right away into Total Stock Market ETF( ITOT). So, my answer would be none. You don’t want to have overlapping by holding individual stock and accumulating years after. Better to have this company in Index fund. If I had a time machine I would go back in March 2020 and instead of buying Aapl position I would buy more of ITOT . Less headache ,less watching company news or scandals .
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Re: How much AAPL stock can I keep?

Post by drk »

tesuzuki2002 wrote: Thu Jan 06, 2022 3:23 pm Let's be honest here... Apple is NO Enron....
But it may very well be General Motors or General Electric or IBM.
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Re: How much AAPL stock can I keep?

Post by Ed 2 »

drk wrote: Thu Jan 06, 2022 3:39 pm
tesuzuki2002 wrote: Thu Jan 06, 2022 3:23 pm Let's be honest here... Apple is NO Enron....
But it may very well be General Motors or General Electric or IBM.
Absolutely. They will . No one immune. That’s why better investing in self healing index funds instead. I don’t understand what people don’t get?
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Re: How much AAPL stock can I keep?

Post by Watty »

pnw_guy wrote: Wed Jan 05, 2022 10:11 pm I really believe in the company and what we're doing, though I know the conventional wisdom is to sell RSUs and the like.
One of the problems is that in theory unless you have access to inside knowledge then everyone else knows that too and it is already factored into the price of the Apple stock.

Figuring out the stock price is also a lot more complicated than just finding a good company. Back in the 1980s I actually worked in the Apple IT department and part of my job was consolidating the sales figures so I actually saw those before the executives did. Even with that knowledge I could never predict just what the stock price would do.

Another issue is that even if Apple as a company does well there can be a shift and the tech sector stocks in general might not do well and it could take the Apple stock price down with it.

I gave up trying to pick individual stocks years ago but one thing I do remember is that you have to really look ahead at how a company can improve in the future and do better than expected. Apple has a lot more ways that its business could get worse than it has ways to greatly improve its business more than people expect. Often in stock picking the best companies are the ugly ducklings that turn out a lot better than most people expected.
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Re: How much AAPL stock can I keep?

Post by drk »

Ed 2 wrote: Thu Jan 06, 2022 3:56 pm Absolutely. They will . No one immune. That’s why better investing in self healing index funds instead. I don’t understand what people don’t get?
The Bogleheads Investment Philosophy had to be written for a reason. :D
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