Short answer: a rally is not, by itself, a reason to hold on. If anything, it's a reason to look harder at how much of your net worth now sits in one company.
The gain itself doesn't tell you what to do next, your risk tolerance and financial plan do, and a rally is exactly the moment those two things are most likely to have drifted apart.
If your company's stock has had a strong run and your vested RSUs are now worth a lot more than when they landed, you're not alone in feeling like the smart move is to just let it ride.
This post walks through why that instinct deserves a second look, a three-question check you can run on your own position, and how to set up a rule so the next vest doesn't turn into the same decision made under pressure.
Table of contents
- Why a rally quietly builds concentration, even when you do nothing
- A three-question self-check before you decide
- Build the rule before the next vest, not during it
- A quick word on tax lots before you sell
Why a rally quietly builds concentration, even when you do nothing
Here's the part that's easy to miss: your share count hasn't changed, but your risk has.
Say you've been vesting RSUs steadily for a few years and never sold much. As long as the stock traded sideways, that stack of shares was a manageable slice of your overall portfolio. Then the stock doubles.
Your share count is identical to what it was six months ago, but the dollar value of that position, and therefore its share of your total net worth, has grown right along with the price. You didn't make a decision to increase your exposure to this one company. The market made it for you.
This is the trap. 'It's working, so I'll let it ride' feels like a choice, but it's actually the absence of one. Not selling after a rally isn't a neutral default, it's a decision to keep growing your exposure to a single stock, made passively, without ever weighing it against the rest of your goals.
And the logic of 'the stock is up, so why would I sell now' runs backwards. A rally doesn't reduce the case for diversifying. It strengthens it. You now have more dollars riding on the fortunes of one company than you did before, which means a reversal in that one name would do more damage to your finances than it would have a year ago.
The stock being a good investment and the position being too large for your situation are two separate questions, and a strong run only makes the second one more urgent, not less.
None of this is a verdict on the company. It's simply what concentration risk looks like when it builds gradually, through appreciation rather than through any active decision on your part.
A three-question self-check before you decide
Before you decide to hold or sell any part of a position that's run up, it helps to separate the emotional pull of 'it's working' from an actual assessment of your situation. Ask yourself these three questions.
Would you buy this much of this stock today, at this price, with new money?
This is the classic test for exactly this situation, and it's useful because it strips away the sunk-cost feeling of 'I've already held it this long, may as well keep holding.'
If someone handed you the cash value of your current position today and asked whether you'd choose to put that much of it into this one stock, at today's price, the honest answer tells you something your instinct to hold won't. If the answer is no, or even 'not this much,' that's information worth acting on, not a thought to dismiss.
Does this position's size still match your risk tolerance?
Your risk tolerance didn't change because the stock went up. But the dollar amount riding on that risk tolerance did.
A position that felt appropriately sized a year ago may now represent a share of your net worth that would have made you uncomfortable if you'd arrived there all at once. Ask whether the current size, not the size when you first started vesting, still fits how much volatility in one name you're actually willing to live with.
What would a sharp reversal do to your broader financial plan?
This is the question that connects the position back to your actual life. If the stock fell 30 or 40% from here, would that change your timeline for a home down payment, a move, or a major goal you're relying on this money for?
If the honest answer is yes, that's a sign the position has grown past the role you originally wanted it to play, regardless of how good the company's prospects look right now.
None of these questions has a universal right answer. They're a way of separating 'this has been a great investment' from 'this is still the right size for me,' which are two different things that a rally tends to blur together.
Build the rule before the next vest, not during it
The reason concentration builds so easily after a rally is that most people make selling decisions in the moment, under the pull of whatever the stock happens to be doing that week. That's a hard environment to make a clear-headed call in.
The fix isn't to try harder to be rational when the next vest lands and the stock is up again, it's to decide your approach ahead of time, when you're not emotionally invested in whichever way the price is moving.
A rule-based approach, deciding in advance what portion of each vest you'll sell and on what schedule, takes the in-the-moment judgment call out of the picture. It means the decision to diversify isn't something you have to relitigate every time the stock has a good quarter, and it isn't something you talk yourself out of because the stock 'still looks strong.'
For the mechanics of actually building that kind of rule, including how to think about vesting frequency, tax timing, and what percentage to systematize versus what to decide case by case, see how to build an RSU selling rule before your next vest.
It's worth noting that the version of this problem covered here, a stock that's risen a lot and built up unintentional concentration, is the mirror image of a related question a lot of RSU holders also face: what to do when the stock is down instead of up. If your position is underwater rather than sitting on a big gain, the calculus is different enough that it deserves its own treatment.
See should you sell vested RSUs if they're in loss for that scenario.
A quick word on tax lots before you sell
Once you've decided to sell some or all of a position, don't submit the order without first checking which tax lots will actually be sold.
Most brokers default to selling your oldest shares first (FIFO, first in first out), which may or may not be the lots you'd choose if you picked deliberately.
In India, foreign stocks held for more than 24 months qualify as long-term capital gains, taxed at a flat 12.5%, while stocks held 24 months or less are short-term and taxed at your income tax slab rate.
Selling shares from different vest dates can put you on either side of that line, so it's worth glancing at which lots you're actually selling rather than accepting whatever the default order gives you.
