Slump Wreaks Havoc on Pensions
Philadelphia Business Journal Online (08/06/01) Vol. 131, No. 6 p.37; Gotlieb, Andy

A familiar lesson that investors know, yet sometimes are seemingly unable to grasp, is that of diversification. Employees at many technology companies across the nation, many of whom demanded stock in light of startups' lower salaries, failed to cash out before technology stocks took a turn for the worse--but they were not the only ones who suffered. The Coca-Cola employee 401(k) plan, for example, has lost over a third of its value since December 1999. Coke's stock, in which around 82 percent of the plan's assets were invested, recently plummeted to a five-year low. "When employees see the stock doing well, they jump in," says Shlomo Benartzi, a UCLA professor who specializes in behavioral finance. "If the company doesn't do well and you lose your job, you could lose your benefits at the same time. I think they're in for a wake-up call."

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