Wednesday, October 3, 2007

Getting Out While the Gettings Good

I worked at a medium sized Biotech company right after college. I got a great position in the company's discovery group doing gene cloning. That was in the summer of 1998. I was given a large amount of stock options as a benefit. The company stock went from $20 (my option price), all the way to $90 (after 2 splits, so $270 unadjusted) during the height of the NASDAQ boom. Luckily I sold 90% of my options at $75 ($225 unadjusted), and $88 ($264 unadjusted).My biotech firm lost about 600 million a year over the 3 years of stock run-up. When the NASDAQ bubble finally broke in late 2000 for biotechs, the stock fell like a stone and traded as low as $9. It currently trades in the $8-$12 dollar range. My 401k was matched with company stock, so my account went from a high of $14,000 in late 2000 to a paltry $2000 when I left in 2003. I mention this for a few reasons:
1. I have been through a mania phase in a bull market.
2. There were lots of people with sell orders set at $100 that never sold, and watched the stock go down to $9 without cashing out a penny.
3. If your 401k is matched with company stock, you need to pay attention to the markets.

I was thinking about this today because the markets have that same kind of feeling. It is not so much that there is wild optimism out there, it is that there is a concerted effort to spin and view everything as positive. I cannot tell you the things people were saying when biotech, especially genomic sciences, was the "New Paradigm", and of course "things were different this time" then as well.
With the DOW around 14k and both the S&P 500 and Nasdaq at pretty good levels, now may be a time to ask a few questions about where you stand financially. Keep in mind the dollar weakness also. If you have options, are they in the money? If your 401k is matched by company stock, do you know about any rollover options to alternate investments? Do you buy stock on a employee stock purchase plan? How much of your investments are tied to one company?
The point here is that you need to take responsibility for your finances and a good time to get the pulse of your money is while markets are high. I am not offering any financial advice here. I am just asking you to take a look at where you are and where you want to be and see if things are favorable.


Anonymous said...

Must have been Human Genome Sciences.

getyourselfconnected said...

Good guess! But no, it was a competitor company.