It is always easy to know the “right” decision in hindsight, but rather than regretting the past, we should remember why we made the decisions we did.
As part of the #TradeMyWay competition, Tim O’Hagan shared his story about how he cashed in his Naspers share options in order to buy his daughter a car worth R89 000 – and how he tries not to dwell on the fact that those shares today would be worth around R10 million!
In the late 1990s Tim was given 3 500 Naspers share options when he was appointed as assistant editor of YOU magazine.
“At R20 a share that sounded like a great deal, one that amounted to R70 000. Struggling to pay off a bond, support a family of five and deal with financial demands, I regarded this allocation by senior management as a generous gesture,” wrote Tim.
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As an experienced options trader Tim was certain that the Naspers shares would grow over time. In 2001 Naspers announced the purchase of Tencent. Within a short time period, Tim’s shares doubled to R40 a share. “I had made R70 000 without forking out a cent! The profit was well timed as one of my daughters needed a car. I remember the car well: it was a brand-new Opel going for R89 000, and I knew my daughter would love it. So, I sold my share options and bought her the car.”
After selling his shares Tim watched the continuing meteoric rise of Naspers. “The extraordinary part of it all was that it all started without fanfare when some very insightful Naspers board members perceived an opportunity in the Chinese market and bought an Internet company called Tencent for $32 million in 2001. None of us hacks working at Naspers then had any idea that, in time, Tencent would become the most valuable company in China, and that Naspers’s 34% stake in the company would grow its market capitalisation to $757 billion.”
Since selling his Naspers shares for R40 a share, the Naspers share price increased 100 times, reaching over R4 000 a share in November. At that price, Tim’s 3 500 shares would be worth R14 million! Even though the price has recently come down quite substantially, his shares would still be worth around R10 million. His daughter’s car is now looking very expensive and Tim must often have thoughts of…. ‘what if?’
But as Tim acknowledges, one cannot live in the ‘what if’ scenario. We all have stories of missed opportunities – mine include share options my husband forfeited when he resigned that would have ultimately paid off our bond, selling a house for R330 000 which three years later was worth R1 million more, and not selling Telkom shares at their peak because we hadn’t completed the FICA process on our account.
But my husband’s decision to change career was the right one, the sale of the house gave us breathing space when times were tough and, well, the Telkom debacle taught us to make sure our admin was up to date.
What is important to remember is that we live in the present, and without a crystal ball, we make decisions with the information we have at the time. We win some and we lose some, but ultimately, we must make decisions that meet our needs in the present. Being able to buy his daughter a car with cash was a gift – without those shares it would not have been possible.
As Tim puts it: “So, I am still paying off the bond. I have doctors’ accounts to pay and face daily demands to account for a TV licence when I don’t own a TV. Had the stars been shining on me in a different galaxy, my shares today would have been worth around R10 million. But hey, my lovely daughter got a car, she knows how to drive, and you can’t put price on the smile in your daughter’s eyes.”