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Strategies & Market Trends : NetCurrents NTCS -- Ignore unavailable to you. Want to Upgrade?

To: chris- who wrote (2425)	10/29/2000 10:38:40 AM
From: Teresa Lo	Respond to of 8925

I think working in the brokerage business gave me an opportunity to watch people, both brokers and clients, for over a decade. It was a tremendous education. One of the more interesting things that came to me was that the brokerage business is populated by those who are exceptionally good at fleecing those who wish to be fleeced. Because there is so much money in the industry, it attracts those who want to make quick money. There are two ways to approach it: be part of the business or be a client. The smart ones choose the former, and enter the business. If you think about it, where can someone who wants to make a lot of money (but has absolutely no capital) get a license to tell lies (if they wish) in a couple of months, and then be able to find clients willing to believe their lies where ever they go? When clients' greed caused them to do away with their full-service brokers, they set themselves up to be taken by those who replaced the brokers: the direct access trading firms, and those purporting to give advice. What has not changed, is the need for the clients for guidance and direction, no matter what they say to the contrary. They always need their hand held, and furthermore, someone to blame for the losses. The added danger now is that most who "give advice" are no longer even licensed, making them unaccountable to the firm, or the SEC on a day to day basis. Some reside in chat rooms; most are anonymous individuals posting to message boards on the internet. Regardless of how the brokerage industry is set up, clients at major firms are indeed well-protected and brokers are monitored closely by compliance departments. If the clients have an objection about the way the industry functions, that's fine, but the system is set up with checks and balances all the way. Brokerage firms have fudiciary duties and they are governed by law and regulatory authorities. Because of their duties, they were rewarded with certain functions, such as underwriting, and generally have a right to reasonable profits, in my opinion. If clients don't like buying "paper" at retail, they don't have to, but it doesn't mean that the cheaper, no-name brand option is really a product that they should go for either. If we look around us, at the news articles, etc., most of the latest bunch of sheep sheerers were people who weren't even good enough to enter the brokerage business in the first place. They are all self-styled. Having been a student of science for most of my academic life, I accept this as a fox and rabbit population cycle, so to me, it's the result of a free market, and as the market got to the top, the last ones that came out to buy were always going to be the easiest ones to fleece. They simply went from the frying pan into the fire. Teresa