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Most of us who work for large corporations get granted stock options as part of the compensation package. As a result, many also hold onto stakes which make up huge portions of their net worth.  Make no mistake, Stock is a great incentive mechanism, especially for smaller companies where each individual has more effect on the bottom line.  Company stock is, however, incredibly risky to hold on to in any large amounts.

Aside from the fact that having large amounts of your net worth tied up in any one asset is a mistake, owning your own companies stock compounds this immensely. Why? Because your job security and the value of the stock are incredibly correlated. If the company’s stock tanks, chances are going to lose your job.  If you lose your job AND your retirement fund disappears, you are straight up screwed.  Look at what happened to the employees of Enron? Or the employees of WorldCom? These employees l0st their livelihood and retirement funds and will now have to work for the rest of their lives.

Be smart, and while you should definitely keep some stock, make sure its not an outrageously high amount.