Comments on: Bear Stearns’ Cautionary Tale

By: James

James — Thu, 20 Mar 2008 13:38:44 +0000

Aleks,

Sounds like you and I work for the same company.

By: Aleks

Aleks — Wed, 19 Mar 2008 19:36:05 +0000

If I could take advantage of the ESPP discount and sell shares to keep my portfolio balanced, I would. However my employer is apparently too smart for that; selling shares automatically gets you kicked out of the plan for a year.

By: Big Cajun Man

Big Cajun Man — Wed, 19 Mar 2008 17:47:24 +0000

I guess these folks didn’t really learn from past mistakes, like in the high tech bubble, when folks lost all their money at Worldcom and other less high profile companies? Paper Millionaires became paupers over night.

Unless you work for a bank, I wouldn’t hold that much stock in anywhere I work. Wait a minute, those folks at Bear Stearns were at a bank, weren’t they? Never mind!!!!!

Your company pays your salary, sets up your benefits and if they give you free money for some investment vehicles, you should take advantage of those.

–C8j

By: telly

telly — Wed, 19 Mar 2008 17:14:04 +0000

A few years ago my company enacted a rule that we could not hold more than 10% of the company’s stock in our individual 401k plans. About 6 months ago, the board of directors voted to change that value to 0%. Makes sense to me. But part of the problem is that companies are not required to make such restrictions, despite what happened to former employees of Worldcom and Enron. There was talk of regulators tightening up pension laws but it just hasn’t happened yet. It’s up to the individual companies.

It’s easy for someone with financial intelligence to know that having 50-100% of your retirement fund in your company stock is a really bad idea but the truth is, many people just don’t pay attention. They’re told that if they continue to max out their 401k every year that they would be able to retire comfortably. And the truth is, they should. But when company’s are still matching contributions with company stock, and don’t regulate how much of that stock their employees hold in their 401k’s, you have to expect stuff like secretaries losing their retirement savings because of companies like Bear Sterns, and even worse, Enron & WorldCom.

I do feel sorry for them. Not everyone has the time nor interest in financial planning to learn everything and I find it sad when people that take the BEST first step (maxing out retirement contributions) get burned due to lack of knowledge. Would I be reading financial forums, blogs and newspapers if I was a single mom of 3 with a low income job? Likely not. But I’d be equally deserving (if not more) than the current me to be comfortable in retirement.

By: Gene

Gene — Wed, 19 Mar 2008 16:42:43 +0000

Of course, there is the flipside of company stock, if it happens to be the right stock. There’s a lot of Microsoft millionaires, and those that bought and hold Dell or Walmart early on have done exceptionally well.

Just listen to Will Rogers:

“The way to make money in the stock market is to buy a stock. Then, when it goes up, sell it. If it’s not going to go up, don’t buy it!”

By: Ryan

Ryan — Wed, 19 Mar 2008 16:26:21 +0000

I can’t believe that more everyday Americans are not screaming about the fact that they are the ones getting screwed when the Fed agrees to pick up the 28 billion dollar tab in order to get JP to buy BS just so that it appears as though BS did not go bankrupt. Also, what does this tell all the other big investment banks that are leveraged 30:1 and risk being wiped out. It tells them they can continue with their bad investments and when things do blow up…the Fed will come in and bail them out, while the American people pick up the tab. What a sham!

By: Canadian Capitalist

Canadian Capitalist — Wed, 19 Mar 2008 03:16:58 +0000

I don't feel sorry for these guys but it's hard not to feel bad for rank-and-file employees.

By: guinness416

guinness416 — Wed, 19 Mar 2008 03:03:15 +0000

I feel very bad for them too. The building on Madison is one of the nicer banking buildings I’ve been in in NY, it’s true Bear looked after its employees; I hope those that keep their jobs can at least stay there.

By: james

james — Wed, 19 Mar 2008 02:23:46 +0000

They should renamed the company to “Bull Stearns”.

By: Four Pillars

Four Pillars — Wed, 19 Mar 2008 01:51:13 +0000

I do feel sorry for the employees but if they had the option to move their money elsewhere then they should have.

So long B.S.! (very appropriate initials).