HAVE BROKER, WHY BOTHER?
May 19th 2008 00:00
Too busy to bother
There are, inevitably, punches and counter-punches in this tug-of-war that, in my own belief, should never be. I mean, both camps serve their own purposes and maybe it is best that they should let the investors decide how they want to trade. But then again, it is their tug-of-war and maybe we should just let them be.
Still, the arguments that fly in a battle like this deserve to be digested. Not necessarily so that we can join in the fray but simply so that we can be properly guided. Never mind which side of the fence we eventually find ourselves in. Just remember that we are not the combatants here. We are part of what they are fighting for, no matter how small, we are a share of the “investing market”.
Now, let us suppose that you, in particular, have a lot of money to invest and, without a care to the scourge those two camps are throwing at each other, you decided to get yourself a broker. You can afford it, so why not let your money make your life a bit easier by accepting those “buy” and “sell” advises? Fine. There is no argument there.
The question however is, should you depend solely on your broker’s advises in making your decisions to buy or to sell those shares?
Before we go on, allow me to make a disclaimer. I know a number of brokers and I believe they are good and dependable. Some of the girls are even beautiful and sexy and the guys are handsome and all that. They are all good intentioned and will not knowingly do their clients any harm. I believe most, if not all, stock brokers are like that.
But given that all of them are good and well intentioned, should the investor, whose money is at risk, just leave it to the brokers to decide on which issues to sell and to buy? And for that matter when to sell and to buy them?
Of course, the brokers will call the investors to ask whether they should buy or sell particular stocks. But if the investors know next to nothing about the stocks being presented to them, aside from what the brokers are telling them, is it still their decision that they are giving when their brokers’ ask them what to do with the shares? Is it theirs, or is it their brokers’ (who, in effect, were acting as their surrogate brains)?
It is like: if I tell you that A is bad, then I asked you if we should buy it and you said “No we shouldn’t” (because you don’t know any better), then I turned around and say “Oops, I’m sorry, I meant to say it is good,” then I asked you if we should buy it and you said “Of course, we should,” (because you didn’t know any better) was that you making the decision or was that me making the decision thru you?
Theoretically, there is no problem there if the brokers have their clients’ interests in their hearts. Theoretically. But theories are only good in the hygienic confines of the academe. Reality is far too contaminated for theories. So many things are at play in the real world, no matter how well meaning the brokers might be.
But what can a less educated, less sophisticated, poorly connected, mathematically challenged investor do? Let’s not start to under-estimate ourselves, okay? For one, we can educate ourselves some more…etc. I’ll grant that we cannot all be Albert Einstein, but we can all open our eyes and our ears. We can turn our heads and look around. Maybe we had been to places our brokers have never been to and maybe we have seen and heard things that they have not.
We can be observant. We can challenge even our own minds and we can form opinions and ideas, and those ideas, coupled with good advises, can become the best decision that we make that is right on the money!
No Sire, I am not saying that we should all be super extroverts and have more business connections than our financial advisers, or grow a second brain and be cozy with numbers or metamorphose into the epitome of sophistication… What I am saying is that we, the investors, should not act like we are all “brain dead,” and leave everything in the hands of our brokers.
AT the very least, let us strive to know enough to understand what they are talking about. That way, we will not be at a loss every time we talk to them. It will likewise lessen the friction between the broker and the investor should a perfectly brilliant advice turned into a pitch dark black cloud. Brokers are humans too, remember? They, too, can commit mistakes.
And not all of them are angels. Some may have an agenda that is hidden just beneath the surface. Or worse, they could be hiding it right smack into our faces - exactly in front – bright as light, exposed in all its naked glory. And we cannot even recognize it.
How can we, if we do not know what they are doing?
Then out of our blissful ignorance, we might one day encounter a false ad that says: “Here is a stock that would shoot all the way up to mars!” The ad will naturally have all the trimmings of a truthful claim and our untrained eyes will unfortunately miss all the small nuances that SHOUT that “this thing is BS!”
Puppet masters or not, our brokers are at our beck and call. Given our instructions, they will place our order to pour everything we have with them to buy shares of that new space technology that will burn its way up our universe and into the galaxies beyond.
Well, if you ask me, the only thing that can burn that fast is our capital - if we make moronic decisions like that. I beg you then, to learn more about this business if you are planning to tinker with it. Remember what they always say about gravity: “the speed by which an object goes up is the same speed that it will take going down.”
Of course, there is no gravity in space. Objects that lost inertia going there will just be floating to nothingness - till eternity.
Darn, that could be your lifetime savings!
| 75 |
| Vote |
