Choppy Waters

My dumbest investment was made years ago, with Global Crossing stock. At the time, the company offered a pie-in-the-sky promise that it would deliver the internet across all oceans to every part of the world.

Oops! Being 100 percent invested in technology stocks in 2000 was also a flop that took most players behind the barn for a severe beating. Live and learn! — Daniel, online

The Fool Responds: Global Crossing was a wonder when it started, going from five to 10,000 employees in less than three years. The company faltered, though, when its undersea fiber optic network wasn’t the huge success it hoped it would be and debt piled up. It also was embroiled in an accounting scandal, having allegedly inflated its earnings by booking revenue it hadn’t received. That all led to its downfall, with the company laying off many thousands of workers and eventually filing for bankruptcy protection in early 2002, wiping out shareholders. At the time, it was the fourth-largest bankruptcy in U.S. history.

You pointed out another danger — being underdiversified, with too much money in just one sector or industry or company. Many employees of Global Crossing probably suffered even more than you, if they held a lot of company stock in their retirement accounts.

This cautionary tale is a good reminder that seemingly promising companies can encounter unexpected troubles and that they can end up in costly scandals, too.