For the first time in seven years and after the sorry lessons of Enron and WorldComm, investors poured more money into company stock, $65 million, than they did any other investment category in January, according to Hewitt Associates.
Betting on ones own companys success at a time of massive job layoffs is not seen as a terribly wise decision. In this economy, youd expect people to move in the other direction, trying to diversify their risks, Pamela Hess, director of retirement research told The Wall Street Journal.
Obviously, theyre not understanding what theyre buying, added Shlomo Benartzi, an economics professor at the University of California, Los Angeles.
Today, two-thirds of employees in 401(k)s with more than 5,000 employees are offered company stock, and about 8% of employees invested in company stock have 80% of their portfolios invested in it.
It is possible that instead of matching employees contributions in 401(k)s, employers are offering stock, experts said.
Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.
3-Week Free Trial
Insight and analysis into the management, marketing, operations and technology of the asset management industry.
Have an account? Sign In