Uri Sabadosh wrote:
>
> Investing wisely has no connection to what Enron did to California and it's
> own employees 401K.
>
> Uri
>

Just to be sure we're all calibrated on what Enron "did" to its
employees 401k:  The Enron contribution to the employees 401K was locked
for 2 weeks for an administrative change.  This is a fairly common
practice when 401K administrative changes are made and not unique
to Enron AFAIKT.  During this time, the stock fell from something like
$9 to $7, but as I understand it, this would only have affected the
stock that the *company contributed*, not the direct employee
contributions.

More importantly, the vast majority of the employee stock
equity loss occurred long *before* there were any 401K "locks".  In
Jan 2001, Enron stock traded around $70, so the employees had almost
a full year to liquidate and diversify their holdings, including the
company-contributed stock which was fully vested.

There are two huge problems with Enron:

1) The senior management team played sleight-of-hand with the bookkeeping
   thereby misleading all the investors - which includes those employees
   which held stock.

2) A significant number of *employees* failed to practices sound investment
   practices and kept "all their eggs in one basket", so to speak.
   While the loss of employee retirement funds is indeed tragic, I find
   it troublesome that Enron leadership is (rightly) criticized for their
   unethical practices and "greed', but the popular reporting on the topic
   almost inevitably fails to comment on the *employee* "greed" that caused
   them to allow their futures to be placed in such a high risk position.  Even/
   especially if the empoloyees in question where unsophisiticated investors,
   they should have sought professional investment advice from a financial
   planner.  Such a planner would almost certainly have recommended liquidating
   and diversifying these unbalanced portfolios.  (The guy I get advice from
   recommends that no more than *4%* of your total assets should be in any
   one company's equity instruments.)
--
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Tim Daneliuk
tundra@tundraware.com

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