Pros versus cons, 401-K is still a splendid thing for the individual investor, who is typically so diversified that he/she is fraud and market-proof. My point still stands, though, that the ratio of over-the-shoulder interest and thumbing-through-earnings-reports to dollars-in-accounts is much lower than it used to be. When it cost you 100-bucks to make a trade, you did it with lots of foresight and homework. Now with 8-bucks a trade, DRIPs, and lower dollar ceilings most investors aren't on the hook for enough to ask tough questions.

In effect, those with bigger stakes and more time to study or wage proxy battles benefit from greater influence dollar-for-dollar. Those are the people to watch.

Truly, the only people who can “fail” with a diversified 401-K are those who were close to retirement and didn't throttle down to more conservative investment mixes. People like me, under-40, should be HAPPY that our dollar-cost averaging is now buying more shares and will eventually rebound with a vengeance.

Thanks for your comment. While I agree that oversight is the answer, the fact is that while the SEC has been chasing after Steve Jobs for daring to backdate stock options, they've been asleep at the wheel when it comes to protecting investors as a whole, whether large or small, institutional or otherwise.

The safest 401k strategy was always to spread the risk across mutual funds, even funds in the same sector on the belief that collective wisdom of the different managers would manage the risk. Unfortunately the deregulation issues came into play with the mortgage/derivative mess, which unraveled the other markets as credit tightened.

Still, the strategy is to simply wait and begin to consider what we want the future to be. 401k investors have a tremendous amount of collective investing power, and can use it for good in a transparent, well-lit marketplace.

*I* have been on the record praising 401-Ks, but recognizing the Unintended Consequence. Namely, that most investors are now at play in a market with such a small personal stake in any individual company that there's virtually no personal oversight in the governance. With $100K split among some 300 companies, it's not worth my while to track every single one, nor travel to a stockholders meeting, nor be the pesky sort I would be if I had a bigger stake.

I do believe that many of the ethics issues we're having have far more to do with an oversight/funding ratio that is out of whack, and far less to do with deregulation or any particular administration in power.