Executed a rare stock sale and sold off the bank shares in my 401k account.
I’ll make this admission now because I no longer work for the place, but my last job was at a bank. It was at one of the larger national banks, in fact, as one of their IT engineers.
Because of having worked there, I had quite a bit of their stock in my 401k account which included purchases from my own contributions, matches from my employer and some bonuses I received over my term as an employee. It amounted to some five figures in fact, and was one of those few accounts I owned that had a concentration in one stock. My spouse and I don’t typically buy individual stocks, but we consider our employers’ stock as special cases.
Well, here is what this company’s stock looked like on Friday. And last Friday, I became a contrarian as the market did one of its dramatic reversals. After a 7% hike in one day, following a previously precipitous decline, I decided to sell off my entire position.
I made the sale not to time the market (yeah right 
) but for purposes of preparing for a rollover (and diversifying). Finally I’m getting around to doing it, and now’s a good chance to capitalize on the nice push up in price, at this stock’s all time high. I’m also not sure I’d like to be stuck owning a financial institution’s stock at the moment, given all the hullabaloo going on in this industry right now.
Oh and this morning, the stock is already down by 10.53%. Sure, it’s caught in your typical market roller coaster activity and temporary downdraft, but it’s still a relief to be off the ride for now.
What do you say….good move?
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I think it’s a good move. Wells Fargo, as much as it would like to think, is not immune from the financial craziness. Sure, they sold off most of their subprime mortgage portfolio (with excellent timing), but they’re still holding on to tons of toxic “prime” mortgages which will begin to reset next year.
-Erica
I usually keep my 401k very diversified, but I was swayed into over-concentrating in this stock by my former colleagues and co-workers at the bank. They were very enthusiastic about the company and were proud to have 100% of their funds in the stock.
This was last year. Seeing that much loyalty, enthusiasm and confidence in the stock from fellow employees of the bank made me join the bandwagon. You know — herd mentality and not wanting to be “left behind”, unable to ride the same trajectory towards potential profits. So I changed my 401k settings to go 100% into the stock as well.
I promptly forgot about this until this week, when my spouse mentioned that WFC was up 7% in one day. Being a passive investor (sometimes, too passive, in fact…), I hadn’t been checking up on my account for sometime (partly also due to not wanting to face losses up close).
Well, with all the market craziness of last week, I found that the 401k web site was sluggish, I lost my PIN and the phone lines to get to a 401k rep were jammed. Took me an hour to get my transactions in, but I’m glad that’s all over and done with for now.
That was definitely a great move even if the stock had gone up 10% today.
It’s so hard to say what is good in this market, but I sold some bank stock on Friday (for a profit) as well. And you know what, it feels so darn good just to be out of it now, no matter what it does!
I read a great piece of financial/investment advice once: if you can’t sleep at night, you need to change your asset allocation until you can. I think of that phrase a lot these days!
I did the same sort of thing on Friday with my wife’s company stock for an old employer. I’d set a target price to sell it about six months ago, and when it came within a penny, I dumped it all. Some days market timing works out fine.
Wow a 5 figure amount in ESPP 401K, would be earning more than $4K/year in dividend income alone. But you are correct – diversification is important in order to ensure that your nest egg would be somewhat protected.
I just bought Wells Fargo shares. Maybe I bought some of yours. I like the way your post reminded me that when I buy a stock, I’m buying it from someone who is equally motivated to sell it. I think the best is yet to come for WFC.
@George,
That’s one way to look at it. I decided I would diversify my holdings as I’m not one to hold and monitor individual stocks. I’m pretty happy with diversified funds or index ETFs I guess.
I am just starting to move my 10K out of savings where they are safe but not earning at all. It is good to see that being diversified is recommended as I would not want to put all my eggs in one basket. My new partner has lots over 30k so we are making sure we do not make the same mistake twice by becoming led by others or an emotionally led decision.
david