Should I Sell My Company Stock? What 30 Years of Market Leaders Show

Many people who hold a large position in their employer's stock describe it the same way: the company has been good to them. The shares came from years of matching contributions, stock grants, or purchase plans, and they have often grown a great deal. Selling can feel like betting against something that has worked.

The question of whether to sell is usually not about whether the company is good. It is about how much of your financial future depends on one company, and what could happen to that one company over the decades you may hold it. History cannot tell you what your company will do. It can show what happened to the companies that were the largest and most established of their time.

Return figures in this post run from December 31, 1990 to September 30, 2026, with dividends reinvested, and are described in Sources and Method.

Should I Sell My Company Stock?

There is no answer that fits every situation, and this post does not recommend buying or selling any security. Whether to keep, reduce, or sell a company stock position generally depends on a few questions:

• How large is it? A position worth 5% of your net worth carries very different consequences than one worth 40%.
• Does your income depend on the same company? If your salary, bonus, and benefits come from the same employer, a bad stretch for the company may affect your paycheck and your savings at the same time.
• What would selling cost in taxes? Shares with a low cost basis may carry a large capital gain, and the tax treatment can differ for shares held in a 401(k), from stock grants, or from purchase plans.
• When will you need the money? A long time horizon may allow more time to recover from a decline; a short one may not.

What history adds is a sense of how wide the range of outcomes can be, even for companies that looked like the safest choices of their era.

What Happened to the Largest Companies of 1990?

According to S&P Dow Jones Indices, the five largest companies in the S&P 500 at the end of 1990, by index weight, were IBM, Exxon, General Electric, Philip Morris, and Royal Dutch Petroleum. Each was a household name, a leader in its industry, and a common holding for long-term investors.

Here is what happened to $10,000 invested in each at the end of 1990, with dividends reinvested and any shares received in spin-offs kept, compared with the S&P 500:

Each company took a different path:

• IBM was the largest company in the index in 1990. Its shares fell about 67% from early 1991 to mid-1993, and over the full period it returned about 2.8 percentage points a year less than the index. In 2021 it spun off its infrastructure services business as Kyndryl.
• Exxon merged with Mobil in 1999 as the surviving company, ExxonMobil. It came closest to the index, trailing by about 0.4 points a year, but its shares fell about 62% from 2014 to 2020.
• 🏭 General Electric was the largest company in the S&P 500 in 2000, according to the same S&P Dow Jones Indices data. From August 2000 to March 2009, its shares fell about 86%. Shareholders later received Wabtec shares in 2019, when GE Transportation combined with Wabtec, then GE HealthCare in 2023 and GE Vernova in 2024, leaving GE Aerospace.
• Philip Morris, later renamed Altria, spun off Kraft Foods in 2007 and Philip Morris International in 2008. Kraft Foods, renamed Mondelez International, spun off Kraft Foods Group in 2012, which merged into Kraft Heinz in 2015. With dividends reinvested and all of these shares kept, it was the only one of the five to beat the index, by about 2.2 points a year. Its shares also fell about 65% from late 1998 to early 2000.
• Royal Dutch Petroleum, based in the Netherlands, was included in the S&P 500 before S&P's domicile requirements changed. In 2005 it combined with Shell Transport and Trading, and today it is Shell plc, which is no longer in the S&P 500.

Of the five, only Exxon and General Electric appeared among the five largest S&P 500 companies again in 2000 or 2010, and none was among the five largest in early 2025, according to S&P Dow Jones Indices.

How Far Did Each Stock Fall Along the Way?

A long-run return hides the path it took. Every one of the five went through a decline deeper than the worst decline of the S&P 500 over the same period:

Largest decline from a previous high, based on daily closing prices with dividends reinvested, for each original company's shares. Past performance does not predict future results.

An 86% decline means $1 million becoming about $140,000. Recovering from that requires a gain of roughly 600%. For someone holding a modest position, a decline like that may be painful but survivable. For someone whose retirement, home purchase, or children's education depends on that one stock, the same decline may change the plan itself, especially if it arrives at the moment the money is needed.

Why Is Single-Stock Risk Different From Market Risk?

The S&P 500 also fell sharply at times. What makes single-stock risk different is what happens after a company stops leading:

• The index replaces its leaders. As companies shrink, the S&P 500 gives them less weight and gives more to the companies that are growing. An investor holding one stock owns that company's full path, whatever it is.
• Results spread out widely. Over the same 35 years, the five returned between about 8.6% and 13.6% a year. In dollars, the strongest result was about five times the weakest, which ended with about 40% of the index's value.
• The winner was not obvious in advance. In 1990, a careful investor could have made a case for any of the five. Philip Morris faced significant legal and regulatory uncertainty in the years that followed, and its shares fell about 65% in the late 1990s, yet it produced the strongest result.

This is the core of the concentration problem, covered in more detail in The Concentrated Position Problem. Diversification does not promise a better result than the best single stock. It reduces the chance that one company's path decides your outcome.

How Much of One Stock Should I Own?

There is no single percentage that fits every investor, and any rule of thumb may miss what matters in a specific situation. Several factors are commonly weighed together:

• Share of total net worth. The same position can be minor in one household and dominant in another.
• Income tied to the same company. Your job, bonus, unvested stock awards, and sometimes your pension may depend on the same company as your shares.
• Cost basis and taxes. Selling low-basis shares may trigger a large federal capital gain. California taxes capital gains as ordinary income, with rates up to 13.3% as of tax year 2026, so the total tax cost of selling can be significant for California residents.
• Time horizon. Money needed in the next few years may be more exposed to a decline than money that can stay invested for decades.
• Estate and gifting goals. Low-basis shares may fit charitable or estate plans differently than other assets.

Because these factors interact, the question is usually evaluated within a broader plan rather than answered with a single number.

How Much Company Stock Should I Have in My 401(k)?

Company stock can also sit inside a 401(k), for example from employer matching contributions made in company stock or from a company stock fund offered in the plan. The concentration risk is the same wherever the shares are held: if the company's stock declines, so does that part of your retirement savings.

What differs is the tax picture. Selling company stock inside a 401(k) and moving the proceeds to other investments in the plan generally does not create a current tax bill, which can make it simpler to reduce a position there than in a taxable brokerage account.

There is one important exception to keep in mind before selling or rolling over highly appreciated company stock. Net unrealized appreciation (NUA) rules may allow the growth on employer stock distributed from a 401(k) to be taxed at long-term capital gains rates instead of ordinary income rates, but generally only if the shares come out of the plan in kind as part of a qualifying distribution. Selling the shares inside the plan first would generally give up that option. NUA Strategy for Company Stock in 401(k) explains the rules, and NUA or Roth Conversions Before RMDs? A California Case Study works through an example.

How Can I Reduce a Concentrated Position Without a Large Tax Bill?

Reducing a large position does not have to happen all at once. Approaches commonly considered include:

• Selling gradually over several tax years, which may spread the capital gains and keep more of them in lower brackets.
• Choosing which shares to sell, such as selling higher-basis shares first or pairing gains with losses elsewhere in a portfolio. This generally changes when gains are taxed more than how much gain there is: the lower-basis shares that remain still carry their gain, although they may later suit charitable gifts or, under federal law as of 2026, receive a step-up in basis at death. Shares held one year or less are taxed federally as short-term gains, so holding periods matter as well.
• Giving appreciated shares to charity, directly or through a donor-advised fund, which may help avoid tax on the gain in the donated shares and may provide a charitable deduction, depending on whether you itemize and on income-based deduction limits. Donor-Advised Fund Tax Deduction: The Bunching Strategy covers one way this is often structured.
• Hedging to limit downside while holding the shares, which involves its own costs and trade-offs.

Each approach has costs, limits, and tax rules that depend on the situation. Reducing a Concentrated Position and Hedging a Concentrated Position cover them in more detail.

Sources and Method

• The 1990 list: the five largest companies in the S&P 500 by year-end 1990 index weight, from Fei Wang, Exploring the U.S. Mega-Cap Landscape, S&P Dow Jones Indices, April 2025, Exhibit 7. The later-decade comparison comes from the same exhibit.
• Prices and dividends: Yahoo Finance daily closing and adjusted closing prices, retrieved October 8, 2026, from the close on December 31, 1990 to the close on September 30, 2026.
• Benchmark: the S&P 500 Total Return index, which assumes dividends are reinvested, from Yahoo Finance (ticker ^SP500TR) over the same dates.
• Spin-offs: shares received in spin-offs are assumed to be held, with their own dividends reinvested. The position is converted to shares at the close before each distribution, and on the first day of trading without the distribution, the original company's shares and the new shares are each valued at their actual closing prices.
• Declines: the largest drop from a previous high in each company's daily dividend-adjusted closing price.
• Kraft Foods Group and Kraft Heinz: in 2012, Kraft Foods, which had become Mondelez International, spun off Kraft Foods Group. Those shares became Kraft Heinz shares in the 2015 merger, along with a $16.50 per-share special cash dividend. The calculation follows those successor holdings rather than treating the Kraft position as ending with Mondelez. Because Yahoo Finance has no price history for Kraft Foods Group, its first-day value comes from Mondelez's Form 8937 ($45.42 on October 2, 2012), its dividends from its annual reports, and the merger terms from the Kraft Heinz prospectus. From July 2015, Kraft Heinz's Yahoo Finance prices are used.

Simplifications. The figures ignore taxes, trading costs, and fees. Kraft Foods Group's dividends are assumed to be reinvested at the midpoint of that quarter's reported high and low price, and the $16.50 special dividend at Kraft Heinz's first closing price; on the chart, its month-end values between October 2012 and July 2015 are estimated from those reported prices. GE's 2015 exchange offer for Synchrony Financial shares was voluntary and is not modeled. Royal Dutch Petroleum's figures use its U.S.-listed shares, with dividends before foreign tax withholding.

Past performance does not predict future results. The companies in this post are named for historical illustration only, and nothing here is a recommendation to buy, sell, or hold any security.

Deeper Dives: Related Topics