"Broker Talk" therefore tends to say things that may
not fit the operation of a Trading & Investment
business. Here are some examples:
1. They discount small stocks either because
they cannot make big commissions on them but facially
because they are supposed to be a lot more risky
investments. Maybe they do not recognize that the
total downside on a one dollar stock is only one
dollar. The downside on a $100 stock is $100 a share,
what is more risky in a highly volatile market heavily
keyed on institutional leverage in large stocks. You
tell me.
2. They take very little risk and usually recommend
the same stocks over and over to all their clients
even though the clients may have differing needs. They
are not very innovative about the stocks they
recommend. Listen to any broadcast investment show and
you will hear the participants talk about the same
stocks over and over again. They talk about the
Microsofts, the Intels, the General Electrics, and any
stock that tends to be in the news already. Anyone can
pick these types of stocks.
3. They recommend large cap stocks which most small
investors can only purchase a few shares of, and which
can drop in price significantly because of there
inherent volatility. A small percentage decrease in
the price of these stocks can produce a significant
dollar loss to a small portfolio.
4. They usually over recommend long term holdings
without equally recommending the need to closely
follow the changes in your portfolio. Following your
stocks closely takes time. Brokers, money managers and
financial advisors cannot physically put in the time
it takes to individually manage hundreds of clients
accounts in the same manner each client can spend
managing his own account. Therefore brokers and
financial advisors who recognize this fact will
naturally have to emphasize long term investments over
a trading approach to each individual clients account.
If you don't follow the changes in your portfolio how
will you maximize profits and minimize losses in the
mots effective way. There are some alternatives to not
watching your portfolio carefully, like investing in
mutual funds, using professionally managed accounts,
using stop losses etc., however these are only
ancillary strategies, the most effective way for you
to maximize profits and limit losses is for you to
take the business approach to watching and managing
your own money and investments. This is the ultimate
approach if you are not prepared to take the efforts
necessary to do this you will not be able to maximize
your money making opportunities in the trading and
investment arena.
Remember just like any profession most people can
become a broker or stock analyst and learn all there is
to know about the stock market. So can you. In addition
you understand your personal situation and can research
and follow the stocks you are interested in particularly
when you have the support services of the Hannaian
Research Center which is specifically designed to help
you operate your trades and investments as a business. So
beware of "Broker Talk", it is generally not designed for
the type of operations you will be involved with. There
is nothing wrong however with talking with brokers and
other financial and investment professionals. Remember
the more information you acquire the better.
Knowledgeable business people acquire knowledge from
wherever they can get it. Knowledge is what keeps you
ahead in the ballgame. But remember you must make the
ultimate decisions and no one can watch you hard earned
money better than you.