Value Investing Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: John Langston who wrote (2530)	11/22/1997 7:47:00 AM
From: john harris	Read Replies (1) of 78618

*OFF TOPIC* (somewhat) John: You wrote...... << I can concur with Mary's assessment of brokers,>>> In the first few years of a broker's career there is a tremendous amount of canvassing for new accounts to become "established". After one is "established" there is further pressure (mostly self-induced) to better the prior year's earnings. This can (it does not "always") create an environment for a quick sale. Enter the typical investor with a moderate degree of investment knowledge. He(she) intuitively believes that a good broker's investments never go down in value as long as the market holds up. In short, most people look for the short-cut to riches in the stock market and some believe that the market will replace the need to work at some point early in their lives. Now, with these profiles on either side of the phone, do you think that the typical investor initiating a relationship with a broker is going to have the patience to be involved in a stock such as HYDEA (extreme example, yet a value story)? The broker knows that the relationship will be short-lived if performance does not take place quickly. So, the broker takes the path of least resistance and tries to make a quick buck for his client in an issue that may entail more risk than is necessary compared to his approach for another individual client who would be more wizened to the movements of market forces. The solution to the above scenario is for the broker to take the hard-line and strongly insist that the client's intuitions are counter to fulfilling his ultimate objectives. In some cases, a "beating up" on day-1 is necessary. But the path of least resistance seems to be what ultimately destroys the relationship. Another solution is to quote the words of the masters such as Lynch, Buffett, and Graham so the client is prepared to deal with adversity when it arrives. My personal solution to newbie customers is to hand out a copy of pages 286-287 of Ben Graham's "The Intelligent Investor". It's a dangerous solution from a new broker-relationship standpoint yet solid for the long term disciplines of the prospective client because Graham says things like the following on these pages: A second business principle: "Do not let anyone else run your business unless (1) you can supervise his performance with adequate care and comprehension or (2) you have unusually strong reasons for placing implicit confidence in his integrity and ability. The "comprehension" thing is the rub. It takes effort to comprehend and not everyone wants to take on that responsibility. That is the investor's path of least resistance.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next