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for the company, watched the stock price every day, and was confi- dent that her 401(k) was stable. I discussed the importance of diver- sification with her. As is the case with every meeting, I left CNBC on so that I could stay constantly informed about what’s going on in the market. During our meeting, a trade for Johnson Controls came across the bottom of the screen; it showed the stock down by a few cents. Now, a few cents is not a big deal when the stock price is as high as Johnson Controls was at the time. However, my client’s entire 401(k) had just dropped noticeably during our meeting. I used this as reinforcement of my point about diversification.

At our next meeting, my client brought her husband in with her. She was still keeping her money in the Johnson Controls stock, which I again told her she should reconsider. I discovered that I had a very strong ally in this: her husband. He was very nervous about the fact that everything was in one stock. Though she wasn’t convinced to diversify totally, leaving only a small portion of money in Johnson Controls stock, she did move a portion of her 401(k) to different funds within her retirement plan. At our subsequent meeting, both she and her husband confided that they felt much more comfortable having money spread across different asset classes, rather than in just one stock.

Another client came to me recently because he was having prob- lems with his 401(k). He had retired two years earlier and had rolled his 401(k) into an Individual Retirement Arrangement at an invest- ment firm. He was now self-directing his retirement money. When he retired in 1998, his 401(k) totaled nearly $1 million. Following the advice of friends, as well as his own research, he spread the whole amount over five different individual stocks and one mutual fund. By the time he came to see me, his accounts were nearly $350,000.

When we met, he was just sick with anguish. Not only had his accounts lost more than half their original value, but also he hadn’t told anyone about this. His entire family still thought there was close to $1 million. He also told me that a few of his friends (already clients of mine) had recommended coming to see me when he retired, but he thought that he would be able to manage his money better. He believed, as I’m sure many do, that since he cared more about his money, he would do a better job.

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