Fireworks on Wall Street
I had something in mind to blog about this morning … until I went to look at this morning’s headlines. Wow. Major fireworks going off over the past 24 hours on Wall Street! The really big news is the terrific implosion of a big Wall St firm Bear Stearns, and how JP Morgan scooped them up for an unbelievably low price. The amazing part of this story is some folks (experts or analysts) are wondering if they paid too much per share for Bear Stearns, even though it was less than 4% of BS’s closing price from Friday.
Maybe fireworks is the wrong word. This reminds me of when I saw the cluster bomb go off in Iraq: pretty to see from afar, but you definitely don’t want to be anywhere near it.
I really feel for the employees of Bear Stearns. Not only do some of them face the prospect of losing their jobs in this takeover, but their retirement is worth next to nothing compared to last week. The news says most of the individual shareholders of the company are its employees.
Which brings me to the one thing I said I knew about investing back in January when I started this journey to understand such a complex subject: single stocks are bad as a retirement plan. A lot of people think that if they have a good secure job, then taking retirement benefits in their company is just as safe as their jobs. Bear Stearns employees probably have something to say about that this morning.
I really hope my mom is paying attention to this ugly situation. Over the summer, she showed me her retirement info, and she has over 90% of it in her company’s stock and options. If CVS Caremark goes belly-up or even declines sharply, my mom’s retirement will be severely and adversely affected. She won’t listen to me about moving her 401(k) into funds either.
My heart really does go out to all the Bear Stearns employees who got caught too close to the cluster bomb that went off in the past week. I hope JP Morgan deals with them fairly. I am sure they are all screaming at the top of their lungs right now:
Single stocks are a bad idea for a retirement plan!
