Is Your Stockbroker A Crook?
Keywords: stockbroker, broker
If you are not too familiar with the stock market or investments in general, you could probably use some help in determining whether your broker is managing your money ethically and responsibly. A good broker not only is concerned with making themselves money but is also motivated to help your portfolio grow. Use the information presented in this article to help you determine whether your broker is a sage financial professional or a crook.
A full-service broker, much like a full-service gas station, advises you on which stocks to buy. Full service brokers are financial advisors, they tell you what to do. However, full-service brokers do not always provide expert advice. Most of the advice they provide is based on research done by analysts who work with them.
A full-service broker offers a wider array of investment vehicles for you to put your money in, such as stocks, bonds, derivatives, annuities, and some also sell life insurance. A discount broker, on the other hand, does not have access to all these investment vehicles. A discount broker makes money by opening up a lot of accounts and having a lot of customers, but a full-service broker makes money by placing a lot of trades within your account, because they receive a commission on each trade.
This is where you need to be careful. Full-service brokers make money every single time you place a trade. So, they have an incentive to persuade you to place a lot of trades, because that is where they make their money. There are unscrupulous full-service brokers out there who do provide sagacious investment advice, but who are so active with your portfolio that their commissions start to eat away at your earnings. Neophyte investors have unknowingly hired these sorts of brokers, and when they get their annual statement they are shocked to find that they made a lot less than what they thought, and in some cases actually got a negative return on their investments.
Also, a good broker maintains constant contact with his or her clients. They should not be calling you every minute, but they should call you once in awhile to let you know about what they are doing with your portfolio. In addition, your stockbroker should not be leaving work every day at the exact moment the market closes. A smart financial professional has to evaluate research reports and economic data after the market closes each day to decide what needs to be bought or sold within your portfolio.
Most importantly, you need to be leery of your broker trying to push you into certain speculative investments. Sometimes, brokerage houses themselves hold huge positions in the stocks of certain companies, and they encourage, or even compel, the brokers that work there to push that stock on their clients in order to drive up the price of the stock so they can sell it at a profit. This can be a good thing if the stock they are pushing offers a potentially lucrative return, but this is often not the case.
I hope this information will help you determine whether you have a good broker. Make sure your broker works for a reputable brokerage house and not some fly-by-night cold calling establishment. Make sure that your broker understands that you are aware of the fact that they make money every time a trade is executed. Independently research some of the stocks your broker has recommended to you to make sure that they are not pushing a terrible stock for their own personal gain. Use all of the recommendations outlined in this article when evaluating your financial professional and you should do fine.
Jim Pretin is the owner of www.forms4free.com, a service that helps programmers make HTML forms.
Previous Articles Highlighter:
Understanding Your Insurance Policy (1)
For insurance purposes, consideration refers to the monetary obligations of each party. The customer has to pay the premium for the policy to remain active, and in return, the insurance company has to pay the damages resulting from a claim if one should arise.
What Mergers Mean For Your Investments (2)
Put together all of the relevant facts discussed in this article and you should be able to ascertain what the consequences will be. Just use your common sense and you should do fine.
Introduction To Day Trading (3)
Day traders dabble in a number of different financial instruments, such as stocks, currencies, stock options, and futures contracts such as interest rate futures, equity index futures, and commodities futures.
Introduction To Mutual Funds (4)
When you buy shares, you are buying a portion of the holdings of the fund, which contains many different stocks and bonds within the portfolio. And, just like with individual stocks and bonds, your shares increase in value when the share price of stocks within the portfolio appreciate, or when interest payments are made on the bonds.
Tax Consequences Of Municipal Bonds (5)
This rule asserts that if you purchase a bond at a discount equal to or greater than a quarter point per year until maturity, then instead of paying a capital gains tax on the increase in principal, you will pay taxes equivalent to your ordinary income tax.
P/E Or PEG, Which Is Better? (6)
In fact, those companies are sometimes the best investments, because if their earnings climb tremendously, then the stock will pay a large dividend in the future (for the uninitiated, dividends are a percentage of the profits of a company that are distributed to its shareholders).
Common Investment Scams (7)
The resulting frenzy drives up the price of the stock, at which point the aforementioned small group of shareholders dump their shares at a high price before the general public knows that the stock is worthless.
Understanding Auto Insurance (8)
I hope this has helped you to understand your auto insurance policy. Even though almost everyone who has a car has insurance, most people have no idea what it covers.
Penny Stocks: A Good Investment (9)
Companies listed on it are sometimes fully reporting (meaning that they reveal how many shares they have outstanding and what their balance sheet looks like). Often, companies go from the Pink Sheets to the Bulletin Board once they are ready to become fully or semi-reporting.
Understanding A Balance Sheet (10)
You can calculate the shareholder equity by subtracting total liabilities from the total assets. If Shareholder Equity is a very small number or a negative number, this does not bode well for investors.
Introduction To Stocks (11)
Job security is not guaranteed, and unless you want to work until you are 80 years old, you need to become familiar with the bare essentials of investing and financial planning.
How To Get Real Estate Listings Via Real Estate Marketing Articles (12)
Well, I have good news and bad news for you. The good news is that there isn't any one best way to get real estate listings. There's something to be said for having multiple streams of leads and listings.
Holiday Insurance - A Necessity Or A Luxury? You Decide (13)
Making Sure You Can Really Relax On Holiday Most people don't want to think of all of the ghastly things that can go wrong while they are on vacation. They only want to think of relaxing on a beach or hiking a mountain or fabulous shopping and the tons of fun they will have while taking a break to rejuvenate their spirits.
Cashback Credit Card For Reward-Loving Individuals (14)
That is why majority of Americans nowadays own a single credit card. Carrying a credit card is not just that you can afford to pay for the interest rate and other applicable charges.
The Benefits Of Gathering Relocation Information (15)
Planning a successful move will come from doing your research and taking advantage of the relocation assistance and benefits you will find by researching relocation information. Craig Chambers is a relocation specialist who enjoys sharing relocating tips and offers extensive free relocation guides and resources on his website www.easyrelocating.com
Credit Card Types: Unsecured (16)
Finance Charge: Your unsecured credit card may include finance charges that are above and beyond the APR. Finance charges are most often triggered when you take out a advance.
MyOwn10-Key - How To Balance Your Checking Account Without First Entering All Of Your Transactions (17)
In your checkbook register, draw a line under the last balance to indicate where you last balanced your account. You know that all transactions above this line are in balance.
New Exchange Traded Fund Makes Sophisticated Investment Strategies Available To ETF Investors (18)
The strategy here is that the index is designed to exploit the trend that currencies associated with relatively high interest rates tend to rise in value relative to currencies associated with low interest rates.
Despite Slowdown California Home Prices Set New Record (19)
Homes were not always priced right. Teardowns were being sold at what would be called unreasonable prices now. When the buying frenzy was on, homes were purchased with the feeling they would increase rapidly within months.
Two New Exchange Traded Funds Allow Unique Oil Investment Strategies (20)
The Claymore MacroShares are structured very differently from other oil-linked ETFs on the market such as U.S. Oil Trust (USO) which invests in oil futures and "rolls" the contracts to maintain exposure.
Newer Articles Highlighter:
Introduction To The Forex Market (1)
If you want to partake in this kind of trading, try to set aside some money and open up an account with an online broker. Start slowly, then as you get the hang of it, work your way up to larger trades and higher volume.
Stock Market Basics (2)
Within an exchange, there is the primary and secondary market. The primary market is for the initial sale of shares in a company for the first time to the public, as with an IPO.
The FOREX Market Is A Goldmine (3)
The ask is the amount of foreign currency that someone is demanding in order to be willing to sell $1 U.S. base currency. The Forex markets are generally considered to be less volatile than then stock market because within the course of a trading day, it is highly unlikely for the value of a single currency to move all that much.
What Is Breakup Value? (4)
Sounds bad, huh? If there is much discussion about the breakup value of a company, it could mean that the company is having problems and is about to be sold off.
How To Select Mutual Funds (5)
A mutual fund is a collective investment security, and there are many different types. It may consist of a mix of several different types of investment vehicles, such as stocks, bonds, or derivatives, or it may consist of nothing but stocks that are part of a certain sector of the economy, or it could be just bonds.
Why You Should Invest In Penny Stocks (6)
To find the right company, there are a few things you need to look for. Number one, you need to do some research and try to find out how many shares the company has in its float.
Why I Like Penny Stocks (7)
A company does not have to have any sales, nor does it have to reveal how many shares outstanding it has to qualify for the Pink Sheets. The reason why a company tries to get listed on the Pink Sheets, even though their stock will not go up in price because they have no sales to speak of, is because it gives their company more substance and credibility; it is typically easier to attract additional capital, obtain financing, and execute contracts and agreements if a company is publicly traded, even if it is on the Pink Sheets.
Learn To Avoid Market Timing (8)
Make sure you know something about the company you are going to invest in before deciding which strategy will best help you to avoid the pitfalls of market timing. Jim Pretin is the owner of www.forms4free.com, a service that helps programmers make a free HTML form and download formmail.
How You Can Avoid Market Timing (9)
If there is an indication that a certain stock is currently undervalued and might shoot up in price, you would actually make less money using DCA than if you had bought all the shares in the beginning before the price skyrocketed.
Penny Stocks Can Be Lucrative (10)
The hard part is finding the right company to invest in, because for every successful startup company, there is also one that fails within the first year or two. To find the right company, there are a few things you need to look for.
The Truth About Bonds (11)
Most people assume that all interest-bearing securities are completely risk free, but this is not the case. Even if you know a lot about investing, you may not be aware of some of the risk characteristics associated with bonds.
Risk Factors Associated With Bond Investing (12)
If inflation is rising, the Fed will need to raise interest rates to tighten the money supply. If inflation is moderate or contained, the Fed will likely leave rates unchanged.
Strategies For Investing In Mutual Funds (13)
A mutual fund is a collective investment security, and there are many different types. It may consist of a mix of several different types of investment vehicles, such as stocks, bonds, or derivatives, or it may consist of nothing but stocks that are part of a certain sector of the economy, or it could be just bonds.
How I Reduce My Investment Risk (14)
If, at the end of the first quarter, the share price has risen to $15 per share, that means that the value of my investment is now $1,500, which means I will only have to invest $500 at the start of the second quarter in order to bring the total amount of my investment for the first and second quarter to $2,000.
Introduction To Foreign Currency Trading (15)
A direct quote uses the domestic currency as the base and the foreign currency as the quote. An indirect quote works the exact opposite way. So, if you were to view a quote in an American newspaper that said USD/JPY = 75, that would be a direct quote and would mean that $1 of U.S.
Bonds Can Be As Risky As Stocks (16)
Talk to your broker about diversifying the kinds of bonds in your portfolio and you will reduce your overall risk and maximize your return. Jim Pretin is the owner of www.forms4free.com, a service that helps programmers make an HTML form
What Is The Purpose Of Umbrella Insurance? (17)
Every day, there are personal lawsuits filed against ordinary citizens, with the reasons ranging from the frivolous to the justified. When and if this happens to you, you need to be prepared.
Is Bond Investing Totally Safe? (18)
The Federal Reserve (also known as the Fed) meets every 6-8 weeks to evaluate the health of the economy. At each meeting, the Fed renders a decision regarding interest rates.
What You Need To Know About Day Trading (19)
Most average day traders look at the resistance and support levels for the price of a given stock. When a stock has reached its historical maximum, it is said to have reached its normal resistance level, meaning it probably will not go up much more.
Mutual Funds Make It Easy To Diversify (20)
A person no longer has to sift through stocks individually in the newspaper or spend hours watching the financial news on television. You can simply select a diversified fund that contains a bunch of different stocks of companies that fit into a certain paradigm, such as a fund containing nothing but small cap stocks, mid-cap stocks, large cap stocks, technology stocks, bonds, etc.