In 2000, A 62-year-old Texas Man Retired After Working 33 Years With $1.3 Million In Company Stock. Twenty Months Later, He Said It Was Worth About $8,000. The Unlucky Story Of Charles Prestwood Holds An Important Lesson For Every Investor

The post In 2000, A 62-Year-Old Texas Man Retired After Working 33 Years With $1.3 Million In Company Stock. Twenty Months Later, He Said It Was Worth About $8,000. The Unlucky Story Of Charles Prestwood Holds An Important Lesson For Every Investor appeared first on 24/7 Wall St..

$1.3 Million at Retirement, About $8,000 at the Hearing

A Texas man retired in October 2000 at 62, after more than three decades of work. He held $1.3 million, all of it in his employer’s stock. Testifying before senators on June 19, 2002, roughly twenty months later, he said about $8,000 stayed.

His employer was Enron. Charles Prestwood of Conroe, Texas, testified that he spent 33 1/2 years building the company, mostly in the field. He started with Houston Natural Gas, which Enron later acquired, and he was a field worker, far from where strategy was set and the books were kept.

What Enron Told Its Workers

Prestwood testified that an internal publication sent to employees in early 2001 reported an 89% shareholder gain. The chairman’s August 14, 2001 email to staff called Enron “one of the finest organizations in business today” and said that “performance has never been stronger.”

A Congressional Research Service report found that 62% of the 401(k) plan’s assets were in Enron stock at the end of 2000, with employees having bought 89% of that stock themselves. As the stock fell, employees were locked out of their accounts from roughly late October to mid November 2001.

From $90.75 to $0.26

Enron stock peaked at $90.75 in August 2000. According to Senate testimony, shares traded at $81.38 on January 25, 2001, and at $11.16 on October 30, 2001. They closed at $0.26 on November 30, 2001, and Enron filed for Chapter 11 on December 2, 2001.

Prestwood told senators that “something stinks here.” He added, “There are people at Enron who made millions selling Enron stock while the rank and file got burned.”

Same Risk, Different Information

Executives who ran the firm could read its books, while Prestwood worked in the field and was told the company had never been stronger.

In 2008, Bear Stearns was acquired by JPMorgan Chase (NYSE:JPM). JPMorgan’s adjusted share price rose 1382.9% from October 2, 2000 through October 7, 2026. In 2000, nobody could know which employer would keep growing and which would disappear.

Money invested in your employer’s stock carries dual risk. When the employer fails, the job and savings go together. This concentration was common. Senator Joe Lieberman said employer stock made up about 20% of 401(k) assets in plans without a company match and about 50% in plans with one.

Running Out of Money Before Bills

Years later, CNN reported that Prestwood was selling small parcels of family land to help cover his mortgage and health insurance. He told the network, “I run out of money before I run out of bills.”

The post In 2000, A 62-Year-Old Texas Man Retired After Working 33 Years With $1.3 Million In Company Stock. Twenty Months Later, He Said It Was Worth About $8,000. The Unlucky Story Of Charles Prestwood Holds An Important Lesson For Every Investor appeared first on 24/7 Wall St..