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American Morning
In Failure of Enron, Many Employees Lost Their Life Savings
Aired January 16, 2002 - 08:38 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN ANCHOR: The failure of Enron, we have been moaning the employees who lost their life savings, many of them, because their 401ks were tied up in company stock. To help make sure you don't make the same mistake, we're joined this morning by Allen Wastler, who is the financial editor of the finest financial editor in all of cyberspace, money.com, and he, too, is an old friend of mine from the 20th floor.
Good morning.
ALLEN WASTLER, MONEY.COM: How you been?
CAFFERTY: I've been all right.
WASTLER: What do I do here to protect myself from the kind of ills that have befallen some of these Enron folks?
WASTLER: All the people that got whacked by Enron, OK, and we're hearing more and more of the fallout from that. But also, generally, 401ks have been very constricted over the last two years. Big losses for 2000, more losses expected for 2001 when they count up the numbers.
When each person considers what's going on here, you got to look at two things: risk and time. And risk, you got to assess yourself, OK? Do I really like things to go up and down? Can I ride it out? Do I like something safe? And time how close am I to retirement. Am I like an older anchor on the edge of my career?
CAFFERTY: Don't start with me!
WASTLER: Am I a young go-getter, like right in the midst...
CAFFERTY: Like Anderson you mean. Yes, that's good.
(CROSSTALK)
WASTLER: Going forward, we got the perfect tool for you on money.com. You just drift on over there. And it's called the Asset Allocator. Think of it more as fix your mix. And there it is, right on the screen. Now look at that, four simple questions you ask: What's Your time horizon? What's your risk factor? Do you have any wiggle room at all in this? And then you just do the calculation, whether or not you would bail in the down market. There's the mix for shy anchors there. It's 70 percent bonds, Jack. I did this with you in mind.
CAFFERTY: Seventy percent bonds? That is a very conservative approach.
WASTLER: That's conservative, because bonds are less volatile. You get more of a steady return. Now if you're more of a go-getter type, like Andersen here, all stocks, baby, you go for that. You're locking in for the big gain, and if you mess up and it didn't quite work out the way you had, you got a longer time horizon to sort of make up for the mistake.
CAFFERTY: The other thing that people have to take into consideration is diversifying those 401ks and not putting all of their money into the company's stock of the firm for which they work, even including this behemoth that we're employed by, Time Warner. It's just not a good idea, you don't put all your eggs in one basket.
WASTLER: Right, it's not a good idea. And what this tool will tell you is, how to divide up your stocks, too, in the big categories, small caps, mid-caps, like that, and it will give you a list of suggested funds. Toward the bottom there, that's a list of mutual funds that might fit the bill. Comes from "Money's" top 100 funds there. So check it out. It could help you out.
CAFFERTY: Very good, appreciate it. Allen Wastler of money.com. Do you miss me downstairs?
WASTLER: I miss you terribly, Jack.
CAFFERTY: Well, I don't miss you at all. Get out.
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