I’ve done a good amount of thinking on this. I think the best strategy in general is to do a rolling flip…accumulate a years worth and then flip immediately once it hits the capital gains window. Upside is the certainty of lower taxes and the potential for gain from stock increases. Downside is that you are further exposed to the risk of the company you work for.
That’s the ideal: In my situation, I’ve also had a fair amount of exposure to my company’s performance via bonuses or options. Because of this, I’ve been flipping it immediately.
It’s all about your risk tolerance. The highest expected value will come from holding it a year, but you have to weigh that against your tolerance and the other risk exposure you have to the company.
One other thought: if you pay $80 for $100 worth of stock, 10% decline wipes out $10 of wealth. Your tax savings are someing like 10% *$20 = $2. $2 isn’t insignificant, but you take on a good amount of risk to save it.
