HINT: LOOK UP “ENRON” IN WIKIPEDIA
I feel sorry for these folks whose 401(k)s were nearly wiped out. But how, in these post-Enron days, can anyone sink more than a few percent of their retirement nest eggs in a single company?
I proudly own zero shares of DuPont common. I even sell the shares I get in my annual bonus the day I receive them. It’s not that I have no faith in the company. It’s just a means of reducing risk. The Sharpe ratio on a single stock, even blue chip DD, is just way too low to risk my retirement funds.
UPDATE: And lest anyone think I’m just a conservative investor, think again. I’m probably as aggressive as one can get in a 401(k), playing momentum and holding no cash or bonds. There’s a difference between being aggressive and being foolish. Investing in your employer’s stock is foolish.
6 Responses to “HINT: LOOK UP “ENRON” IN WIKIPEDIA”
 Comment by Cavalor Epthith, Esquire September 13th, 2007 at 7:22 am |
It is still not too late to buy gold. We see it going to between 800 and 815 by year’s end reflective of the increase in the price of oil and most of the trillions of dollars in Chinese liquidity staying on the sidelines. But of course I know nothing of finances 😉 My best to you and yours! Qu’ul cuda praedex nihil! |
 Comment by speedwell September 13th, 2007 at 10:46 am |
Yes, gold, absolutely. Let me stress that it should be actual gold, bullion, not gold stocks or futures. Thanks for helping me resists the temptation to go into a 401K, even though I work for a company in which such an investment five years ago would have more than doubled by now. I’m sitting here mentally chanting, “Past performance is no guarantee of future performance.” |
 Comment by Daryl Cobranchi September 13th, 2007 at 10:54 am |
If you’re not contributing to the 401(k) at least enough to get your maximum company match you are throwing away free money. There are absolutely safe investments even in 401(k) plans. Company stock just happens to not be one of them. |
 Comment by COD September 13th, 2007 at 11:03 am |
Yep- worst case you could leave all your 401K money in the cash account, but you absolutely should participate at whatever level you need to collect 100% of the company match. A diversified portfolio is still your best bet for long term capital gains. If you have 20 years until retirement the day to day stock market swings in 2007 are not relevant at all to your future worth. I take a different approach than Daryl. Everything is in index funds, 90% stock, asset allocation as per the classic Bernstein text, and then I forget about it. |
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Comment by COD September 13th, 2007 at 11:04 am |
BTW, there was no excuse for the Enron folks either. My first job out of college back in 1989 one of my older coworkers told me never ever tie up your retirement in company stock, because if the company tanks you’ll lose your retirement funds along with your job. |
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Comment by speedwell September 14th, 2007 at 12:09 pm |
Enron (shudder)… The morning that broke, I was working in one of the office buildings attached to the Galleria Mall in Houston. I went downstairs to the food court to pick up Chick-Fil-A biscuits for my boss, and people were standing around crying. |