According to today’s Wall Street Journal:
J.P. Morgan Chase & Co.’s deal to buy Bear Stearns for $2 a share wiped out the life savings of many of Bear’s 14,000 employees, who owned one-third of the firm’s shares. Most employees at Bear, known for its loyalty and a strong merit-driven culture, expected to lose their jobs.
Mr. Raphael, a Bear Stearns board member until recently, said he spent the weekend telling clients their money was safe and added that all Wall Street brokers were vulnerable. “I blame the system, I blame greed,” he said. “Wall Street is really predicated on greed. This could happen to any firm.”
Now, no one likes to hear of someone’s life savings being wiped-out. I know that I would be devastated if it happened to me. It’s truly a tragedy, and one that could have easily been prevented.
BUT, Bear Stearns is a mega-financial firm, ones which deals with investing issues everyday, one which knows the value of appropriate asset allocation, and one that knows the risks involved by not being diversified.
IMO, if you work for Bear Stearns, you should have had the knowledge and foresight to have your life savings diversified and appropriately allocated. Even the non-financial workers at BSC should have been aware of the risks of keeping a large portion of one’s life savings in company stock.
Did we not learn that lesson from the Enron and WorldCom crises? Anyone who’s ever read a magazine, newspaper, listened to the radio, or watched television knows to be careful about buying company stock in their retirement account. That experience should have cemented in everyones’ minds the risks associated with investing in company stock.
So, when it comes to the blame game, please remember to look first in the mirror, and then second with the “expert” managers with whom you’ve entrusted your savings. Don’t shift the blame to others, where it doesn’t belong.
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