Employee Stock Purchase Plans and Stock Options – Your Investing Archimedes’ Lever?

Night Seesaw

A practical application of Archimedes’ lever

“Δός μοι πᾷ στῶ καὶ τὰν γᾶν κινήσω “


“Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.”

In the last article, “Investments Where You Can Influence the Outcome” we talked about investments where, rather than doing your research beforehand, investing your money, and hoping for the best, you could potentially positively (or negatively) influence the outcome of your investment after you’d already made your investment.

One commenter, who runs the blog Done by Forty, suggested that one possible investment where you could influence the outcome is via an employee stock purchase plan (ESPP).

After all, if you work there, and you are purchasing company stock, aren’t you a little more motivated to work harder, unless you just realize that you’re working with a bunch of mega-brains and you’re the Atlas of the bell curve, holding it up for everyone else who works there. In that case, you might be investing in your co-workers rather than your own motivation! But, I digress…

Let’s look a little deeper at ESPPs and their cousin the employee stock option and see just how much your motivation impacts the stock price of your employer.

But, first, we need to answer the basic question: what is an ESPP?

Can You See Into the Future With ESPPs?

Investments Where You Can Influence the Outcome


Recognize these sharks?

“Every man gotta right to decide his own destiny.”
–Bob Marley

I recently read a blog post by venture capitalist Fred Wilson about how they focus on the company that they invest in, not necessarily the investment. One sentence really stuck out to me:

Venture capital is one of those asset classes where you can impact your investment.


I think that the allure of investing in individual stocks and actively trading in the stock market is actually an offshoot of Wilson’s quotation.

If you’re trying to shoot for the moon with an investment, what do you do? You research the stock. You watch CNBC. You read forums. You pore over filings. You might even listen to earnings conference calls. You may even ask a friend or someone you trust about the investment to validate your “investment hypothesis” (even though selection bias will almost certainly persuade you not to listen to someone who tells you that the investment is a bad idea).

After doing all of that research, and perhaps scattering a few chicken bones or consulting with an astrologer, you decide to take the plunge and make your investment.

Then, what?

You watch the stock price like a hawk, hoping that it goes up and up and up.

But can you actually do anything about your investment aside from set the price at which you would buy and the price at which you would sell?

Sure, you can place proxy votes. You could even go to a shareholder meeting.

But can you personally reduce costs or increase sales?

Almost assuredly no.

Why does someone go through all of that effort when once they have made the investment, they have zero ability to impact it and, generally speaking, they will underperform the market?

Illusion of control.

We love to tell ourselves that we can control the outcomes of our investments, even if we really cannot. Hence, we go through the gyrations to create a narrative that we can tell ourselves about what great investors we are.

So, if we cannot influence our investments in the stock market, are there investments where we can influence the outcome?

Investments Where You Can Influence the Outcome

Lies, Damn Lies, and Anchors

“Above all, don’t lie to yourself. The man who lies to himself and listens to his own lie comes to a point that he cannot distinguish the truth within him, or around him, and so loses all respect for himself and for others.” –Fyodor Dostoyevsky “The best lies about me are the ones I told.” […]

Continue reading...

Should You Just Donate to Charity Instead of Going to IHOP’s Free Pancake Day?

“He who goes to bed hungry dreams of pancakes.” –Proverb (probably attributed to Aunt Jemima) March 3, 2015 is National Pancake Day from IHOP. You go, get free pancakes, and the cost is a donation of whatever you think is appropriate to give to the Children’s Miracle Network Hospitals. I love the notion and the […]

Continue reading...

President Obama Calls for a Stronger Fiduciary Standard. Should You Care?

“…back-door payments or hidden fees for steering people into bad retirement investments that have high fees and low returns…” –Barack Obama On February 23, 2015, President Barack Obama threw his support behind a forthcoming (as of the writing of this article, it had not been released) Department of Labor fiduciary standard. According to a White […]

Continue reading...

Food in a Box

“Cooking is like love. It should be entered into with abandon or not at all.” –Harriet van Horne “When the waitress asked if I wanted my pizza cut into four or eight slices, I said, ‘Four. I don’t think I can eat eight.’” –Yogi Berra I grew up in a Southern family. My grandmother cooked […]

Continue reading...