Ten years ago last Friday, Enron Corp. filed for bankruptcy protection. Once the seventh-largest company on the Fortune 500 and, according to its official motto, “The World’s Leading Company,” Enron crashed as fast and hard as any giant in corporate history.

What lessons does the Enron collapse hold for today’s investors?

As the following tale might show, perhaps the first is not to over-invest in your own company’s stock; the second, don’t assume you understand your company far better than outsiders could.

We spoke this morning with a former senior manager at Enron who now works as an independent engineering consultant in Texas. He asked not to be identified by name since, as he put it, “the Enron ghost has long tails, and I am still finding a high negative association with potential employers.” We will refer to him as Enron Executive.

TR: When did you join Enron?

EE: I started in 1979 as one of the first employees of what was then called Internorth [a natural-gas pipeline company that ultimately became Enron]. I had studied electrical engineering, and I got recruited out of university by [chief executive] Ken Lay directly. I think I was the company’s 17th employee.  I finished at the senior vice-president level; by 2000, I was the No. 3 or 4 executive in Europe [at Enron’s infrastructure division].

TR: When did you first realize something was going wrong at the company?

EE: I was in Moscow at the time, working out of our office there. My driver picks me up and drives me to our office building. I get out, and my keys do not work in the front door. I call my executive assistant at home, and there’s no answer. I had my driver call the Russian federal police, the equivalent of the secret service, and he was told the locks had been changed by the government because they had gotten word overnight that Enron had just gone up in smoke.

It was that sudden. We were totally in the dark. Among the employees and executives I worked with, there was nothing on anyone’s horizon that anything at the company was untoward or that anything untoward was even contemplated. None of us had any concept or knowledge that Enron was in trouble.

TR: How had you invested at Enron?

EE: Internorth/Enron had an ESOP [employee stock ownership plan, in company’s shares were offered to employees and executives at a discount]. As a senior executive, my contributions were matched six-to-one by the company. In the time I’d been there, our annual revenues had gone roughly from $10 million to $50 billion, and the stock was up like a rocket.

I was 45 years old then, and I was on my way to early retirement with an eight-figure portfolio. I knew that the ESOP wasn’t insured, but it didn’t seem to make any difference. There was no smoking gun.

TR: What happened to your portfolio when Enron collapsed?

EE: I lost roughly 90% of my net worth in a week. I never recovered. My marriage of 22 years blew up, and my entire network was nuked. I realized almost immediately that [complete] financial recovery wasn’t possible…. Even today, I worry that I might not be able to find a financial road to provide adequately for my son [who is in second grade].

TR: How have you invested in the intervening years to try to recover what you lost?

EE: I got burned on having too much money in company stock, so I went in the other direction: I overdiversified. I decided never to have any one position be more than 5% of my portfolio, so I ended up owning 75 or 80 different assets. That was also wrong, because I couldn’t score big if any of them worked out.  Now I’m down to eight or nine main holdings.  I’ve got mutual funds, some with an international focus. My equities are split between real-estate investment trusts that pay a high dividend and natural-resources stocks.

TR: Often when we warn investors not to put too much money into their own company’s stock lest they end up owning “the next Enron,” they respond by saying that nothing so bad could ever happen to their company. They regard their own company’s stock as safer than the stock market as a whole. Based on your experience, what would you tell them?

EE: People don’t like conflict. If they don’t wholly believe in what they’re doing, they can’t live with the internal tension. Most people seem to think that if they just believe in their company, everything will be OK— in fact, that believing in their company will help everything work out OK. And then their defenses go down and they lose their skepticism, and when something does go wrong all they can do is say, “This can’t be happening, it must just be some kind of bad dream.”

I know, because that’s exactly what I lived through.