Yep...it finally happened today. A major player on Wall Street went under. Bear Stearns, one of the most well-respected names on the Street sold out to JP Morgan for $2 per share. It was at $160 per share less than a year ago and $100 per share in December. I almost fell out of my chair this morning when I found out.
Now...no matter how you feel about the company(or whether you have ever even heard of them), there is one sad thing about the demise...7,000 people are going to lose their jobs. I think JP Morgan was planning on keeping half of the estimated 14,000 employees of Bear, but the other half is going to be shortly out of a job. I feel for these people. In addition, there are some stories I heard today about Bear employees who had their entire retirement plan tied up in Bear Stearns stock. While I feel bad for someone who is ready to retire and only has $50,000 to their name, I feel even worse if that account was worth $1 Million a few weeks ago. This brings me to today's lesson, fellow readers....DIVERSIFY!!!!
Most of these people at Bear are very smart people so they should have diversified their retirement accounts. But I know there are lots that didn't. Take my advice....don't be stupid...DO NOT HAVE ALL OF YOUR MONEY INVESTED IN ONE STOCK!!!!. I can preach this over and over to people but there is always someone who thinks they are smarter than everyone else. Ask the people at Bear Stearns...Ask the people at Enron. Don't have more than 10% of your portfolio in one stock and you will live to fight another day if the company blows up. You won't be happy when you lose 10% of your money, but it sure beats losing your entire life savings. It's just not worth it....
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