Okay, boys, you've all had a good time ganging up on Dan, to where I now feel compelled to respond on his behalf.
First, let's not distort Dan's original point--that Brinker, in his anti-broker rantings, sometimes goes a little overboard. If you don't need a broker, hey, more power to you, you're smarter than 98% of the other investing public is. You have a rare ability, and ample time, to do what us brokers do for a living--that is peruse all of the news stories, et, al that have to do with the stock positions our customers own.
I have no problem with this--I can safely say that if I was ever out of the business, I'd probably do it myself too. I'm a hands on kinda guy. But, if I was a regular investor and not a broker, I can certainly say that I would use a full-service guy...I'm not talking about some schmuck at ML pushing his lps or proprietary mutual funds--I'm talking about a broker at an independent shop or a small regional firm who is willing to monitor my stocks and fill me in on the stuff I couldn't be on top of while I was pursuing my own line of business. My first job out of college was as a salesperson for 3M. I made all of my own stock and option calls, but used a fullservice guy to monitor them--I couldn't imagine picking up the paper the next day to find the option position I had was down 50% from the day before, and then, the next question would be, why did it drop? Sure, I paid a little more in commissions, but I always felt it was worth it--I was never awakened to a melt down by reading it in the newspaper--AFTER the fact.
Some people can viably trade their portfolio using a discounter. There's nothing wrong with this--hey, more power to you, if you can do this. But there are others, inspired by Brinker, who are made to think that they should hold each penny so closely to their eye that they are unable to see the dollar bill behind the penny. For instance, if you use one of these deep-discounters, thinking you are saving money, think again. Lets say you are buying 1000 shares of Goodrich at $40. Full Service Broker is charging you $150 for the trade. Mr. Quick & Reilly is charging you $80 for the same trade. You buy it thru Q&R, using Brinker's analogy that all brokers are sharks. What you don't know is that Q&R is routing your trade thru the Midwest Exchange, costing you another 1/8 of a point (that's if you're lucky). For your cost cutting diligence, you are rewarded with a $125 hickey (1000 shares * .125), thereby offsetting any savings you were hoping to recoup through Brinker's Shark Attack warnings. So, that happening, (and believe me, it does happen--don't kid yourself) were you well advised in Brinker's advice to treat brokers like used car salesmen, or did Brinker's advice actually cost you money? Think about it--it doesn't just apply to Nasdaq stocks, it also applies to listed stocks. I have personally called down to the floor and talked to the specialist in a listed stock, to get the full picture of what a stock looks like on the floor prior to executing a customer's trade on a listed stock. Do you think the specialist would give the same consideration to Joe Sixpack, who was an ardent listener of Bob Brinker's and was using Ultra-deep Discounters for his executions? The specialist would tell him to get screwed, and furthermore, that specialist wouldn't see his order flow because it would have already been routed to a third market, to compensate the deep discounters for their order flow. That is just another case of bending over picking up pennies when there are dollar bills flying over your head. The funny thing is, that Brinker endorses your picking up the pennies whoile the dollar bills are flying over your head.
It's kind of like if you got thrown in jail for DWI. Your first impulse is, "Get me the hell out of here, ASAP. Call an attorney who can sign me out instantly." Brinker's approach would be "Stay in jail--you don't really NEED an attorney or bail bondsman--they're SHARKS. Let them hold you until your arraignment, then pray like heck that the judge releases you on your own recognizance at the arraignment..." That's great, you just might have saved yourself a couple hundred on bail money, but while you were waiting for arraignment, you became another inmate's wife, and found yourself "tossing his salad." Now do you see what I mean by bending over picking up pennies when there are dollar bills flying over your head?
That's another pet peeve I have with finger pointers like Brinker. Everyone wants to point the finger at brokers who make markets in Nasdaq stocks, like they were Jesse James. Well, do you really think that deep discounters are Santa Claus? How do you think they can maintain their deep discounts? Has it ever occured to you that it may be because they are being compensated for order flow by a third mkt? Once again, there is no free lunch on Wall Street. Guys like Brinker would have you think otherwise. Now I see he's pushing some cock-eyed deal about pushing margin rates to 80% from 50%. Sounds like old Bob has been having lunch with Meyer Berman and all of the other old codgers who are out to kill the SOES bandits. If Bob had a brain in his head, if and when a proposal like this were to be approved, he'd be 100% short the market--the whole economy would crater. What a genius that guy Brinker is. I can't wait to see him arm-in-arm with Meyer Berman the next time CNBC decides to air another "forum" on SOES trading.
As Troy Aikman says, "Get Real." |
