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Personal Finance > Investing
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Enron-proof your portfolio
graphic February 1, 2002: 6:46 p.m. ET

Spotting Enrons-in-waiting; investing in stocks, funds that avert disaster.
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  • Special report: Enron's collapse
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    NEW YORK (CNN/Money) - Things are getting sketchier by the day. First, there was Enron's collapse, which cost employees more than $1 billion in retirement savings.

    Now there's the fallout. Earlier this week, stocks tumbled as accounting concerns gripped investors. And that could be just the beginning, as earnings come under the scrutiny of auditors chastened by Arthur Andersen's example.

    In other words, don't be surprised if a lot of companies downwardly restate earnings in coming weeks as audited 10-Ks and 10-Qs start rolling out. (See "Waiting for the Next Shoe to Drop" by Adam Lashinsky.)

    Even if you don't invest directly in those companies, you may still be hit with a loss in your mutual funds. After all, a lot of fund managers, including those at Janus and Putnam, were caught holding the bag on Enron.

    So what's an investor to do? Two things: reassess and, if need be, rebalance your portfolio.

    To that end, we offer a host of articles and tools that can help.

    First, we take a look at stocks you can count on. Our criteria: companies with dependable growth, sound financials, and solid, easy-to-understand businesses. (For a look at our picks, click here.)

    For more tips on how to spot an Enron-in-waiting, read our technology columnist David Futrelle's take in Accounting Optional, about the corrosive effect stock options can have on a company's bottom line and how you can spot it before the damage is done.

    We also give you a run-down on five funds we love. Our choices won't take you for a wild ride and they won't break your heart. (Click here to see which funds made the list.) In that same vein, we profile Bob Olstein, one fund manager who consistently avoids the Enrons of the world by obsessing over earnings quality, a trait that has paid off handsomely for shareholders in Olstein Financial Alert (OFALX). (Click here to read more.)

    Of course, if your 401(k) is your top concern because, like Enron employees, you have a high percentage of your savings in company stock, you're hardly alone. In The 'Enron Problem,' we look at some of the 2,000 companies that have a majority of 401(k) assets in company stock. For help in remedying the situation in your account, read our resident expert Walter Updegrave's advice in Saving your 401(k).

    Once you've cleaned house, you might want to review your asset allocation so that your investments are in keeping with your age, goals and risk tolerance. For help, try our Fix Your Mix Asset Allocator. And for sound investing strategies, read Be a Better Investor.

    And, lastly, if you want to see how much farther you have to go to meet your retirement and savings goals, play Moneyvillegraphic

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    Special report: Enron's collapse





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