Reason #456 to not be heavy into your company’s stock

There is an article in this week’s Indianapolis Business Journal that details the lawsuit filed by ex-employees of WellPoint charging that the company caused financial chaos when they slashed their earnings forecast. The lawsuit contends that the company should have warned employees who held the company stock that things weren’t looking good.

People. People. People. You should not be that much invested in your own company’s stock. Many company’s offer their stock within the 401k program. People tend to think that it is a good investment because they happen to know something about the company. They tend to think, “Well, my department is doing well, that means that the whole company is doing well. I should invest more money in the company stock”. That is a really, really bad idea. Your financial well being already hinges on your employer, you don’t want it to hinge on your employer even more by holding their stock.

Relax. Breathe. Divest yourself of your company stock if you have more than 10% of your balance there.

Leave a Reply

Your email address will not be published. Required fields are marked *