If you want to see/ read about wealth and value destruction, one company to read about is GE.

This set me thinking about the ‘lucky’ millionaires. Lucky in the sense that they did their CA or MBA and were looking for a job. Then they found it in Hdfc, Hdfc bank, Hdfc asset management company, Hdfc Life insurance, Infosys, TCS, Wipro,…..and another set of people who got jobs in Crest Animation, Global Tele, Silverline, Himachal futuristic, Mazda Industries, Satyam…

As a low level employee there is no way how you would have known the difference between these 2 sets of companies. In both sets of companies you would have got ESOPs. The value of ESOP went up in both the cases. I even know of some employees who SOLD Silverline at Rs. 950. Surely there must have been people who sold Satyam at 500. Or HFCL at Rs. 1200.

Now let us see the story of the peon in Hdfc who is a millionaire because he held on to the shares since 1980, and is still holding the same. What is that? Luck? Or skilled enough to be lucky. Some fairly INCOMPETENT people have become millionaires with just one quality – staying the course in a journey while accepting that they are not very talented. Requires tremendous smartness to accept such a situation!

We only get to see their portfolios and conclude “If he has Rs. 19 crores in NET WORTH he must be a smart chap”. Sorry, but not true. Lucky for sure. Smart enough not to have sold a rising star, but what if the star were to fail? why not sell say an X amount of shares EVERY month and do a SIP in a well run fund? Hmmm

Some risks – like concentration risk – are fairly obvious. However, the employee/promoter does not want to sell even a single share. I know people with about 89% of their net worth in ONE COMPANY STOCK. For me that limit is about 15% – even if it is your employer..

Microsoft had created 20000 millionaries by the year 2004. Hdfc bank, Hdfc, Infosys, Biocon, Wipro – all of them created millionaires. However sometimes it does not turn out that way – Satyam,,,there is a whole list out there. Remember there is an IPO graveyard in all countries. The ESOP graveyard is much bigger.