Getting recommendations from your broker

Písmo: A ++ A --

First of: this is not to bash brokers as such in any way.

But because of my dealing with a lot of newbies day in and day out, I feel obligated to stress here the following; if you are a new kid on the block who just signed up with your broker and start getting his/her (“free”?) advisory services, just remember that their advice is often provided with only one main goal in mind: to generate commissions from you, period.

To encourage your “speculative activity” (dang, I guess I just invented a new buzzword for overtrading), brokerage house research departments are continually turning out recommendations.

Well, perhaps the customers themselves are partially to blame for this. Since they WANT advice given to them.

They ask for it. And brokerage houses may have a bias toward telling customers what they want to hear.

As a rule, brokerage houses usually concern themselves with price changes; the whole area of capital and risk management is left to the customer. Since risk management is vital to success in the market, you must still do a lot of managing for your own account. This is not to say that your brokers advice is necessarily bad. Much of it is first-rate. But a weekly market letter can only tell you so much about a market.

A large part of the decision-making process that will affect the success of your account still remains in your hands.

This is your business. Please remember that.