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Author: joetangerine Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25223  
Subject: Re: DO NOT let this happen to your 401k! Date: 12/19/2001 8:11 PM
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cable666 writes:

I disagree. I think it is very prudent. Anyone would have to be insane to have 67% of their assets in one company or investment at any age.

What if the market overreacts to news in my company's industry and clobbers my company along with the rest even though it is fiscally sound. I would not be able to move funds from say a crappy performing mutual fund in order to take advantage of that opportunity to buy extra stock at a low price?!? Yet, I never changed my contribution percentages for each fund for new contributions taken out of my pay. Who cares if for a few months my percentage of company stock is say even 70% of my portfolio? Its my choice and should stay my choice, because I wanted to take advantage of the opportunity offered.

By the way I do not have 70% of my investment in my company's stock. Just 69.9%.

You mention that the fund managers had invested in Enron. True, but not 56% of their fund! They aren't that stupid.

Yes, exactly but they believed the same info as those ENE employees and were burned for the very same reasons. Yet, it still comes down to the fact that those ENE employees CHOSE to put too many of their eggs in one basket. They are the only ones to blame for that decision.

I don't think the senator is lining his own pockets. There are plenty of other investment options available to a 401k, and plenty of vendors who can compete to perform the investment services.

I never said Sen. Corzine was lining his pockets. He does not need to he made his multi-multi-millions on just one stock though - the Goldman Sachs IPO that he lead as CEO.

I would be more than willing to live by this 20% rule if all present and former executives of all companies were held to this 20% rule for their portfolio's even their stock options, golden parachutes, etc. Let's see Mrs. Boxer and Mr. Corzine try and sell that line of BS to them. Mr. Corzine wants to legislate how we invest, but does not live by the same principle himself. If he did he would only take stock options that matched 20% of his portfolio at that time.

I did say though that this type of legislation will definitely line the pockets of his former cronies on Wall Street. If you read the NY Times article, 42 million Americans have over $2 trillion in 401k accounts. Having to move that much money around sure would rack up some mighty big fees for all the brokerage houses.

The whole idea is ridiculous. How exactly do you legislate this 20%?

What happens if you buy a mutual fund offered in your 401k that happens to have 5% of its equity in your company's stock? Does that mean you would have to sell an extra aggregate portion of your company stock in your 401k, so as to not exceed the 20%? What happens then if the mutual fund sells all or some of their holdings in your company's stock. Can you then buy that aggregate amount back?

What happens if you buy only 20% of you companies stock and the rest in mutual funds. Then, over a 6 month period your company stock doubles in value while your mutual funds are flat. Are you then required to sell off your stock in the company to get back down to your 20%?

tangerine
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