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Gold/Mining/Energy : Stockbrokers: who's agenda?
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To: JAMES BORECKI who wrote (6)7/13/1997 12:50:00 AM
From: Serge Collins   of 16
 
James, It's interesting that you would make the analogy with groceries on a store shelf because often when you buy a stock recommended by your broker, you're buying stock that's on the brokerage firm's shelf.
These brokerage companies underwrite stock issued by publicly-listed companies and are allotted a certain number of shares of this issue. The problem is that most companies issue new stock at precisely the time when it is most advantageous to them---when the price of their stock is high.

The underwriters then relie on their employees (brokers) to sell these shares to their clients (investors), who just happen to buy as the share price is quite rich. Of course these brokers do their best to hype up the company by issuing glowing reports about the company their promoting. So you see James, these brokers and their employers don't have your best interest at heart, their main consideration is their own financial well-being.

Jim Lang is bang on when he talks about brokers relying on in-house analysis and the conflict that appears to engender. There is no arms-length relationship between the two and that is a major problem in this industry.

As for some of the recommendations made by these brokers; it never ceases to amaze me what junk these guys recommend. It's probably best to assume more control over your investments and go the independent route.

John Kenneth Galbraith once said about stockbrokers--" Asking your stockbroker if you should buy stock is like asking a dog if it's hungry."
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