More than a year ago, I wrote an article about the importance of protecting your financial well-being by diversifying your employee stock options. That was my way of demonstrating the risk facing Microsoft employees with most of their wealth tied to the company. Now that scenario has, for the most part, come true. After April's mini-crash, the consternation spreads far beyond Microsoft.
Many individuals now find the value of their options sharply reduced or even erased.
We can't predict how much any individual stock will appreciate over the next five years. We can't predict a sustainable drawdown rate for a single stock portfolio. If you work for a company like Sun, you should be proactively addressing diversification now. If you work there, your best strategy may be looking for a new job. Until last year, employees of companies whose stock had fallen sharply could hope that their options would be repriced.