Employee loyalty should stop at the pension fund door

Unbelievable. Five years after Enron and WorldCom went down, taking not only thousands of jobs but most of their employees' retirement savings with them, we are hearing the same old song: Bear Stearns 401(k)s were crammed full of company stock. And they're not alone:

  • One-third of employees eligible to invest in company stock through their 401(k) have more than 20% in their company's stock.

  • Almost 9% of them have more than 80% invested in their employer.

  • For employees in their 60s, almost 20% hold half of their 401(k) savings in company stock.

What is the proper amount of your investment portfolio to have in your company's stock? In my opinion, zero. Your paycheck and your retirement savings should not all depend on one firm. It sure as hell shouldn't be 20%, much less 80%. But your company is in great shape, you say? Bear Stearns was trading at $150 not very long ago. It's fine to hold a little company stock, but it shouldn't be the funding mechanism for anything crucial, like the food you're planning to consume in old age.