It's All In The Diversification

Diversification is a powerful tool to help reduce the risk of a portfolio. Unfortunately, it seems that many people on Wall Street seem to ignore the benefits of diversification. During 2011, employees at the five largest Wall Street banks lost a combined $2 billion in their 401k accounts, mainly due to the falling stock prices of their employers. For example, Morgan Stanley employees hold an average of 24 percent of their 401k balance in Morgan Stanley company stock. During 2011, these employees lost a combined $570 million on the investment. Since an employee is already relying on their employer for income and benefits, buying company stock as well results in a concentrated portfolio. Experts recommend that an employee invest no more than 5 percent in company stock. http://www.businessweek.com/articles/2012-07-12/wall-street-workers-bad-401-k-bet