And then there were two......

Only two left.....with Lehman filing for bankruptcy, and Merrill being acquired by BofA. And of course Bear Sterns was acquired by JP Morgan in the Spring.

I feel bad saying this but I am experiencing a serious bout of schadenfreude. I realize many people at these firms had nothing to do with getting us into the current meltdown (i.e. the admin staff). But I can't help but feel that these firms and their employees were among the primary enablers. These folks with their MBAs and Ivy League degrees were supposed to "know better." They were supposed to correctly evaluate the risk and determine the appropriate actions. All the while, they were making ridiculous sums of money (as all on Wall Street do, regardless of their competency).

I have many friends and family suffering various consequences of the housing meltdown (most all in unrelated industries). In my mind, it only seems appropriate that Wall Street should also feel the consequences of its failings (beyond a reduction in their 6 figure annual bonus).

A tragic 401k reminder from Bear Stearns ...

For years I have been listening to financial pundits on tv tell us not to invest our 401k's in the company that we work for. For all of their claimed financial savvy, apparently many Bear Stearns employees failed to heed this advice and are now likely to lose not only their jobs (it has been reported that J. P. Morgan will can 50% of the Bear Stearns employees), but have also lost virtually all, if not all, of their retirement, and for some, life savings.

I don't profess to be a financial person, but those that I listen to are adamant about diversifying retirement and savings. That means never invest in the company you work, so that if it fails, you only lose your job, not your job and life savings. It also means investing outside the sector that you work in ... After all, how good of a plan would it have been for a Bear Stearns employee to invest all of his/her 401k stock in Thornburg Mortgage (now trading at less than $2/share)? Many of the pundits recommend investing across a minimum of 5-7 other sectors.

Even knowing the advice of the pundits, I am regularly guilty of being too invested in cash equivalents (which historically pay too little), or too invested in one sector. I wish I had the self-discipline to follow the advice of the pundits!

Paul