Stock Gains Can Add Up After Big Declines

Sudden market downturns can be unsettling. But historically, US equity returns following sharp declines have, on average, been positive. A broad market index tracking data since 1926 in the US shows that stocks have tended to deliver positive returns over one-year, three-year, and five-year periods following steep declines. Cumulative returns show this trend to striking effect, as seen in Exhibit 1.

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Should I Exercise My Incentive Stock Options?

Incentive stock options (ISOs) are high risk, high reward opportunities, which often leads to high stress. Exercising early can be incredibly risky as it’s possible that you exercise before the stock falls in value. On the other hand, you can potentially save big on taxes if you exercise early, the stock soars, and you divest at the right time. Stock options are just one more consideration that leads to anxiety for startup founders and employees.

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Ryan ColeComment