From Fleckenstein --
"At its peak, the stock market measured nearly 180% of GDP, and it's still about 130% of GDP. For those who don't know, at the peak in 1929 -- our previous biggest bubble -- stock prices to GDP were only about 90%. Also, aggregate debt in this country relative to GDP is higher than it was in the late 1920s. Back then, we ran a trade surplus with the world, and now of course we have a massive trade deficit. The situation is far more precarious now than it was in the late 1920s, and we still have a long way to go in terms of letting the air out of this bubble. That's for those who think nothing bad can ever really happen here."
SPD = Summary Plan Description.
Every qualified retirement plan with an IRS Determination Letter (approval letter) is required by law to give one to all eligible employees. It is usually given out with insurance materials or is in a company handbook. It has the official name of the plan, the ER ID #, your rights as a participant, plan highlights and features, etc.
<< My husband has a 401K and it's required to have 60% of it in company stock. >>
I find this hard to believe... I don't think it's legal... maybe the employer MATCHES are in company stock and have to stay there -- the matches represent money that your employer doesn't have to give you anyway. The money that YOU contributed is yours do do what you want with. You can withdraw it and pay the IRS penalty... more likely you can move the money into a safer investment vehicle.
I'd stop contributing to this scam 401K program if you can only buy company stock with your contributions.
I've worked with qualified retirement plans for 20 years and I've never heard of a plan requiring that a certain percentage has to be in ER stock.
They would be within their rights to match in ER stock and not allow you to convert as was the case w/ Enron.
You should have an SPD on the plan. If not, call the HR dept and request one. If they don't give you one, call your nearest DOL office.
My husband has a 401K and it's required to have 60% of it in company stock. Can only change that at age 65 and 10 years with the company. Hope the law changes so he can lessen this percentage, but right now he has no choice.
"...With Cisco, JDS Uniphase, I get the impression that the accounting was probably OK, and the decline was due more to general economic conditions and perhaps some mismangement...but not fraudlent..."
Egregious accounting, but not evidently illegal as in ENE. Still bad enough.
The one to really watch is Telecomm Carrier accounting. Track the story of GX and the issue of Indefensible Right to Use (IRU) and resales amongst various carriers.
FBI is investigatng GX and possibly A.A., although it may turn out that what was done is egregious, legal, but unexpected. Nonetheless, could further dampen overall investor confidence if findings suggest nefarious dealings.
One other point: Don't follow telecomm carrier stock price as an indication of where this maybe headed. My opinion is that it's not priced in (certain of) the telecomm equities. WS will deflect the issue as much as possible. You might see a lot of yoo-yoo action.
<I don't see why the collapse of Enron stock is so much different than the collapse of Cisco stock...lose 80% or 100%... not much difference between the two. Or JDS Uniphase, down more than 95% from it's high>
I have not paid a whole lot of attention to all of the details, but my general impresssion is that the primary difference was that Enron's accounting was much more misleading, (probably fraudlent) and secondarily (not quite as bad) they loosely gave much more of other peoples money (i.e. the stockholders)to the politicians for political favors or for whatever reason. Also I get the impression that these high paid Enron executives spent too much time with their country club living, and and not enough time tending to business and did not know what was going on as to the status of the company and how to run the business effectively and efficiently.
With Cisco, JDS Uniphase, I get the impression that the accounting was probably OK, and the decline was due more to general economic conditions and perhaps some mismangement...but not fraudlent.
Of course the court's will decide if Enron was fraudlent.
I don't see why the collapse of Enron stock is so much different than the collapse of Cisco stock...lose 80% or 100%... not much difference between the two. Or JDS Uniphase, down more than 95% from it's high.
<.....the employees must take some blame for lack of diversification; illegal activities or not.>
My thoughts exactly..... but how many times have you heard the demagogues in the Congress and the media say this?
I agree that Enron was/is an awful fiasco....but I see most of our current politicians and media commentators as being PP too). (PP stands for politically pathetic)