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Quote from the article: > “Employees need to think very carefully about investing their own money beyond 10% in company stock,” said Corey Rosen, founder of th

by pm90 9y ago

Quote from the article: > “Employees need to think very carefully about investing their own money beyond 10% in company stock,” said Corey Rosen, founder of the National Center for Employee Ownership, a nonprofit that works with companies. “If you are looking at retirement, then diversification is a good thing.” The whole article seems to be "People trusted GE stock way too much; it went down and they lost massively". This is another reason to be informed and proactive about the basics of finances and where your money really is. Perhaps I sound too harsh, but I simply fail to understand how all these people thought that holding 6 figure amounts in a single stock was a good idea? I just do not get it... wouldn't any financial planner have recommended diversification?

Someone1234 9y ago
> Perhaps I sound too harsh, but I simply fail to understand how all these people thought that holding 6 figure amounts in a single stock was a good idea? Indeed. But yet people in this thread are advising moving it all to just a single index fund. While index funds are somewhat diversified many suffer from over-investment into specific industries like tech. If the .COM bubble burst again tomorrow several of the most popular index funds with be hit hard... For example, look at the popular Vanguard Total Stock Market Index Fund, 20% in Technology, and 20% in financial, but if you dig into the financial portfolio you'd realize that a pop in tech would also sink many of the investment companies in financial too. I guess what I am saying is, an index fund is better than a single company holding, but it isn't a broadly diversified portfolio. If you want a diversified portfolio it will cost you, since many of the alternatives don't perform as well (e.g. international index funds, small-cap, etc).
- astura 9y ago
  That's why people close to retirement or who are in retirement need to change their asset allocation. Nobody is suggesting a retiree should hold 100% equities.
gascan 9y ago
It's worth remembering that once upon a time, at least, there was no such thing as index investing or even low cost investing. Trades & brokers were expensive, and shares were frequently literally pieces of paper. My father still has paper shares from that age. They live in a bank vault. Buying stock directly from your employer skipped the broker & Wall Street. We all know picking stocks is perilous- but what do you if it's 1970, six years before VFINX was even created? You pick your own stocks, hire a broker, or buy expensive mutual funds. Don't feel like a good stock picker? The safe play, of course, is to buy big reputable companies with a long history of stable stock- see, GE. Anyway, I just wanted to point out it was something of a different world back then. I think it wasn't even that long ago that you typically still had to buy whole shares of things. Which, as I'm sure you can imagine, is a big part of why DRIP is another recent phenomenon.
- pm90 9y ago
  That's a great point and thanks for making it. Totally forgot that index funds and electronic trading are very recent phenomena.

by pm90 9y ago

Someone1234 9y ago

> Perhaps I sound too harsh, but I simply fail to understand how all these people thought that holding 6 figure amounts in a single stock was a good idea? Indeed. But yet people in this thread are advising moving it all to just a single index fund. While index funds are somewhat diversified many suffer from over-investment into specific industries like tech. If the .COM bubble burst again tomorrow several of the most popular index funds with be hit hard... For example, look at the popular Vanguard Total Stock Market Index Fund, 20% in Technology, and 20% in financial, but if you dig into the financial portfolio you'd realize that a pop in tech would also sink many of the investment companies in financial too. I guess what I am saying is, an index fund is better than a single company holding, but it isn't a broadly diversified portfolio. If you want a diversified portfolio it will cost you, since many of the alternatives don't perform as well (e.g. international index funds, small-cap, etc).

astura 9y ago
That's why people close to retirement or who are in retirement need to change their asset allocation. Nobody is suggesting a retiree should hold 100% equities.

gascan 9y ago

It's worth remembering that once upon a time, at least, there was no such thing as index investing or even low cost investing. Trades & brokers were expensive, and shares were frequently literally pieces of paper. My father still has paper shares from that age. They live in a bank vault. Buying stock directly from your employer skipped the broker & Wall Street. We all know picking stocks is perilous- but what do you if it's 1970, six years before VFINX was even created? You pick your own stocks, hire a broker, or buy expensive mutual funds. Don't feel like a good stock picker? The safe play, of course, is to buy big reputable companies with a long history of stable stock- see, GE. Anyway, I just wanted to point out it was something of a different world back then. I think it wasn't even that long ago that you typically still had to buy whole shares of things. Which, as I'm sure you can imagine, is a big part of why DRIP is another recent phenomenon.

pm90 9y ago
That's a great point and thanks for making it. Totally forgot that index funds and electronic trading are very recent phenomena.