Enron - I still don't feel sorry for these folks...

Discussion in 'After Hours Lounge (Off Topic)' started by Eric_L, Jan 26, 2006.

  1. Eric_L

    Eric_L Screenwriter

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    . .Enron woes reverberate through lives


    http://news.yahoo.com/s/usatoday/200...tethroughlives


    WHAT??? According to whom? Really.. By what standards? A 'sound investment' is a fairly large blanket term which could imply treasury quality to the trashiest of assets. I wouldn't call a $700,000 portfolio invested 100% in ANY one stock a sound investment - unless the sound was of flatulence. The author obviously knows nothing of 'sound investing'.

    These sob stories about people feeling bad because they made STUPID investment decisions really irk me. Step up folks and admit YOU mad a stupid decision. Yes, Ken and his gang all deserve everything that the SEC can throw at them, but if these investors had invested with any sense of responsibility they would all still have been able to reach their goals with the other assets - which would have grown quite nicely since then. It is not Enron’s fault, it is their own. Quit crying about it and move on folks.

    [rant font off]
     
  2. Micheal

    Micheal Screenwriter

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    The old guy lost his retirement nest egg. I feel sorry for him regardless of what you've written.

    Did he make a mistake? Sure, we all make mistakes.
    I still feel sorry when someone goes through a life changing mistake like this one.

    I guess if you take a chance and walk down a dark alley one night and just happen to get murdered then we shouldn't feel sorry for you?? You were just stupid for trying to take a short-cut... right? [​IMG]

    I feel sorry for you that you needed to take the time out to rant on someone who has lost everything. Do you always react in such a manner or are you just having a bad day?

    He made a big mistake and he'll pay for it for the rest of his life. Isn't that enough?
     
  3. Eric_L

    Eric_L Screenwriter

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    Yea, you got a point there. I certainly have had a bad day. (My office was flooded this AM by a burst pipe). I do feel for the unfortunate people, but I don't feel that their woe is something we should lay entirely on the folks at Enron, Arthur Anderson or anyone other than themselves. I get weary of hearing people blame everyone else for their own poor judgement. I have considerably more sympathy for the folks who were set back 10% than those who were set back 100%. The 10% people were misled - the 100% were foolish.


    I would feel for the person who took a shortcut through a dark alley and got mugged, but the comparison is not valid in this case - unless that person was walking there with their entire life savings - which begs the question - what were they thinking??
     
  4. Mort Corey

    Mort Corey Supporting Actor

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    When the housing market readjusts itself it'll make Enron look like a bunch of pikers. Heck, the USG defrauds people out of a lot more money than 10 Enrons through annual inflation. There just ain't no free lunch or sure thing.

    Mort
     
  5. Rob Willey

    Rob Willey Screenwriter

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    I can't cite any specific sources, but I seem to recall that the investment choices in Enron's retirement plans were severly limited compared to most employer's plans. Enron stock and not much else. The thinking was it give the employees greater incentive to cut whatever corners management asked for to make sure the stock price remained high.

    Rob
     
  6. Micheal

    Micheal Screenwriter

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    Understood.

    Thanks for clarifying.
    Sorry if I came off too harsh,


    Mike
     
  7. Lew Crippen

    Lew Crippen Executive Producer

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    Well Eric, I understand that you are having a bad day. But still, you are comparing your sophisticated understanding of investment to that of someone who likely took Ken Lay and his cohorts at their word: “that investment in the company is a sound investment.”

    It is very easy now to look back and realize that the top officials of the company were not telling the truth and only out to line their own pockets.

    For me, I have nothing but sympathy for those who believed the company line and lost and nothing but loathing for those who sold their employees (and the company) down the river for their own benefit.
     
  8. Eric_L

    Eric_L Screenwriter

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    Well Lew, I just don't really consider the golden rule of investing (diversify) that sophisticated, especially for technicians, chemists, and other well educated people. We'll just have to agree to disagree on that one. I'm going to stand by my ascertation that these people who lost everything investing foolishly have only themselves to blame.

    Enron should stand as a blaring example to all people of the need for diversification - particularly with 401k and familiar companies. Sadly, I can tell you from personal experience, there are many who still just don't get it. (You know - 'that can't happen to me' mentality) Ignorance often provides it's own punishment. THAT is the real sad part.
     
  9. Carlo Medina

    Carlo Medina Executive Producer

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    Enron was considered a great investment. The University of California system has always been considered one of the better judges of what to invest in--their investment and retirement plans are traditionally rated very highly. They had, you guessed it, invested in a large amount of Enron shares. Now granted UC is huge and their investments were varied and diversified so when Enron went down, the effect was not as drastic as it would be on one individual.

    But my point is that Enron, pre-expose, was considered a very good stock to invest in. Those people probably had many, many people who supposedly were "in the know" about investing telling them that Enron was solid. The facade was held up by those people who are now standing trial. That's why Enron officials deserve to go to jail.

    So personally, I do lay blame the on Enron and not the individual (and no, I didn't lose a thing because of what they did).
     
  10. MickeS

    MickeS Producer

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    Get your facts straight before you start ridiculing a guy who lost all his savings.

    Oh yeah, hilarious. Until you consider that Enron matched 401(k) contributions in Enron stock, which explains why a lot of them had a large portion of it. AND that stock could not be sold until you turned 60. Laugh out loud funny, indeed!

    Also, there was a blackout-period due to changes in the retirement plan, that occurred right about this time, so many people could not sell even if they wanted to.

    You're right that one should diversify. But the problem here is that Enron was built on fraud, and the executives knew, took the money and ran, and left the investors and employees behind.
     
  11. Lew Crippen

    Lew Crippen Executive Producer

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    For me Eric, you are way too harsh on the individuals who lost their savings. Aside from being defrauded by the company and its top management and the problems with buying and selling stock as pointed out in other posts (such as MickeS), statements that lay all of the blame on the individuals who bought the stock goes too far, at least in my opinion.

    Why you absolve Ken Lay and company (which you do when you state that those who lost “have only themselves to blame”) of any responsibility is as incomprehensible to me, as is the failure to diversify to you.
     
  12. Brook K

    Brook K Lead Actor

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    Also, Enron acquired Portland General Electric. You had public utility workers with a government backed pension they had paid into for years that would provide guaranteed payments to retirees, suddenly working for a private corporation who converted their pension into eventually worthless stock.
     
  13. Kirk Gunn

    Kirk Gunn Screenwriter

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    If the employee can't sell the stock that is 50% of their funds (assuming an annual 3% match of salary with a 6% withholding) , how can they diversify ? Your flip attitude gives Capitalism a black eye...
     
  14. Mike Voigt

    Mike Voigt Supporting Actor

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    Eric, pardon me, but your ascertation [sic] is nonsense. They had no choice - not if they wanted to make any money, because they were severely curtailed in other investments.

    Yes, they could have invested elsewhere, and should have - but who in their right mind would give up a pretty generous 401k matching plan, never mind additional stock given to personnel at all levels when the company had a banner year, which it did many times? Several people had large shares in Enron - and paid for it. And, this is quite normal practice for many companies; it's considered good policy because the employees participate in the success of the company, at whatever level they get shares. I too have a number of shares like that. I don't rely on them, but they do represent part of my portfolio - and I get 75 cents on every dollar up to 6% of my pre-tax salary. If you were an employee making 100K (I don't), then that adds up to 6K + 4.5K added to your 401k every year. Not bad, especially with 20 to 30 years of growth. Add the stock growth, which for Enron was substantial, and you could perform at or above market levels with not too much trouble, counting the shares (and their appreciation) into the growth on the 6%.

    Frankly, I do feel sorry for them. The owner of the house I used to live in in Florida retired from Enron. A year afterwards, he lost his entire pension - and a good chunk of his 401k. What is he supposed to do? Roll over and lump it?
     
  15. Chris Lockwood

    Chris Lockwood Producer

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    Buying your employer's stock is a bad idea, regardless of the company. You're already relying on them for a paycheck (95% of your income, for most people), so why put more eggs in that basket by having your investments tied to them as well?

    Now if they gave you cheap options, or you get a steep discount on the stock, that's different.

    I knew one guy whose idea of diversification was to own 4 or 5 companies in the laser eye surgery industry. Yeah, all his stock was in that very narrow industry.
     
  16. Kirk Gunn

    Kirk Gunn Screenwriter

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    All of this investment advice is very worthy. Unfortunately the Enron employees, many who were lower-level line workers, admin folks, etc - not PHd's in Chemistry and Finance, were not allowed a lot of option in their plan.

    While it is true they chose to be employed by a company which linked pension value to company performance, this was a case of fraud by various members, if not all, of the executive board. Not bonehead choices by the employees.

    As a laissez faire capitalist at heart, I believe committing fraud should be punished most severely as it undermines the foundation of the system. Every future wage earned by those found guilty should be garnished until the billions are paid off. At 25 cents per hour working in the prison laundry, that may take a while..
     
  17. Chris Lockwood

    Chris Lockwood Producer

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    > Unfortunately the Enron employees, ... were not allowed a lot of option in their plan.

    I don't know the specifics, but any 401k plan I've ever seen gives you SOME options. You usually at least get to pick from a few mutual funds of different types, like small cap, large cap, value, international, etc. Any of those would usually be a better choice than having all your money in one company's stock.

    Does anyone know if they really had no choices but Enron stock?
     
  18. Michael Reuben

    Michael Reuben Studio Mogul

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  19. Jeff Gatie

    Jeff Gatie Lead Actor

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    From what I heard, Enron made it almost impossible for them to choose anything but Enron stock through matching incentives. They matched employees' investments in their own stock at an absurd amount compared to any other fund. They also pushed it rather heavily during many 401K meetings.
     
  20. Philip Hamm

    Philip Hamm Lead Actor

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    I'm guessing that you don't really understand how a 401(k) works. Even if you diversify in the company's 401(k) that money is still controlled by the company. Even if those people had 0% of their 401(k) in Enron stock they still would have lost everything. Which is why you need an independant IRA in addition to a 401(k). For more information contact a qualified financial advisor.
     

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