For a few years in the late 1990s, Enron was the company everyone wanted to be — a stodgy pipeline operator that had reinvented itself as a trading house and a stock-market darling, named America's most innovative company by Fortune six years running. Its employees believed in it the way you're supposed to believe in your employer, and the company gave them every reason to put that belief somewhere concrete: their retirement plans.
The structure was the trap. Enron matched employee 401(k) contributions in Enron stock, and many staff, loyal and optimistic, loaded the rest of their savings into it too. It is the oldest mistake in personal finance — your salary and your nest egg riding on the same single horse — and it is made most often by the people closest to the company, because they are the ones who feel certain.
When the accounting fraud surfaced in the autumn of 2001, the stock that had traded above US$90 the year before fell to pennies in weeks. During part of the collapse the plan was in a “lockdown” while administrators changed, and employees could only watch the number fall, unable to sell. The company filed for bankruptcy on 2 December 2001. The figure above is what a lifetime of those savings was worth by the end.
The Bureau's finding: this is not a story about a loss the market handed out at random — it is a story about concentration, and about the particular danger of investing in the thing you also depend on for a wage. The reforms that followed (Sarbanes-Oxley, diversification rules for company stock) were written in the language of this exact catastrophe. Case closed. Diversify the horse.