Wealth gone, sympathy follows

In an earlier post, I questioned the investing savvy of James Cayne, since he lost close to a billion dollars because he kept most of his wealth in Bear Stearns stock. I pointed out that this ran contrary to basic investing advice, i.e. be sure to diversify your portfolio. And he wasn't alone - Bear Stearns employees owned a third of its stock. Turns out I wasn't the only one questioning this strategy.

“I used to think Enron was the poster child of what not to do with company stock,” said Mike Scarborough, president of an investment advisory firm based in Annapolis, Md., referring to the energy trading company whose collapse shattered the nest eggs of employees who held so many of its shares.

“But it may ultimately turn out to be Bear Stearns, because money and investing is their business — and it still turned out badly.”

Nice to see the New York Times coming to the same conclusion that I did, but, really, what were these people thinking? No money, no job, no sympathy.