Sometimes, and from what I gathered from various news reports, Enron was a prime example of this, there is undue pressure from the company management for the employees to hold a significant share of the company stock. There are substantial benefits to both employees and the company when that occurs, but the risk is high. So long as Enron was a flyer on the stock market, it benefitted everyone who "stayed in" the Enron stock, but, once management started getting out, which was patently illegal, actually, the employees should have done so as well. Once people started "getting out," the house of cards collapsed.

Perhaps there should be legislation to prevent companies from exerting undue influence on their employees to load up their 401K or IRA with company stock, disproportionately to the risk involved. How a proper balance between the investor's options as exercised by the employee, and the employee's right to do what pleases can be reached is not clear, however.

In '87, I was heavily invested in stock in the company where I worked at the time. As it happened, my aniversary date and the company rules on changing the profile of the 401K, to which the company was a contributor, since they matched a portion of my investment, coincided in a way that allowed me to be "out" of the stock market shortly before the "black Monday" that occurred in October of '87. Since I could, on a quarterly basis, change my profile, I got back into stocks at the next opportunity. The result was that I was "out" just before the market dropped by 20%, and was subsequently able to get "in" again before it recovered, which it did, so I essentially earned that 20% just by getting out and back into the company-stock-heavy 401K option. I'd have been very unhappy if some legistative restriction had prevented me from doing that.

So you see, protecting the investor from his own potential risks is a two-edged sword. It cuts both ways.

However, as a part of a company where something's amiss is somewhat like raising animals. If you pay attention, and handle your animals each day, you'll know in plenty of time when there's some sort of trouble on the horizon. If you blindly plow ahead, simply putting in your time, not paying any attention to the well-being of your company, or of your livestock, you'll end up in trouble. It's all about paying attention.

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