I don't know what is wrong with the Lucent folks. A guy I worked with was working in Lucent and they invested all his 401(k) in Lucent stock. He lost it all when LU melted down. (I was a 'value investor' on the downward slide – bought into the Bell Labs sheen – and got creamed)
It's not just lucent folks. It's the average employee at any company. Look at all the Enron folks.
Imho, one of the worst decisions I've seen some folks do
1)Hold on to vested stock options for a long period of time
2)Buy and hold on to ESPP stock purchases for a long time
3)Invest 401k money into company stock
4)Buy the company' stock with Net income.
It's not that any of the decisions above are bad by themselves, but I've seen folks do 1-4 simultaneously. Folks usally do this when the company stock is rallying ,because of greed. But this is really asking for it because if the company does bad
1)The stock you purchased with net income loses money
2)You screw your retirement account (401k)
3)You end up doubly screwed on the ESPP from (a)share value loss and (b) paying for taxes on income from ESPP share purchases due to how the IRS recognizes ESPP shares differential from the FMV as income versus cap gains
4)Your options probably go underwater, rendering them useless
5)You might even lose your job due to the performance of your company.
Hence, when you are in the most financial crisis, any financial backup you had went with fall of your company.
