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Binoculars
2nd Feb 2006, 14:42
The share market is no longer a mystery. Every detail is available on line, every company announcement worthy of analysis. Anybody who knows what a balance sheet is can, if they are so inclined, read between the often obfuscatory lines of an annual report, then Google the missing quantities. It ain't, as the current saying goes, rocket science.

So why in god's name are some people still paying full brokerage fees to stockbrokers who do nothing more than push buttons?
When I first invested in the stock market fifteen years ago I paid 2.5% entry and 2.5% exit fees. The market was not set up in those days for daytraders. $500 fees for a quick $10,000 in and out transaction, and what did the monkey do for it? He exercised my buy order by pushing a button and my sell order by pushing another button. Big deal. Not once did a broker suggest to me that given his research on a particular stock he recommended a different course of action. In short, a chimpanzee could have done the same job.

What do we have now? Well, the secret garden is now open to all. Every kid with a computer thinks he can be a share trader. We have online forums where extraordinary amounts of false information is passed on to gullible newcomers. There is a general pretence that this has nothing to do with the inexorable rise of the market, and perhaps it doesn't really matter at all. Mr. Money Market is what it is, and the young and foolhardy are accepted on the same basis as the ancient and wise as long as they have the money. And it only costs $30 for a $30K transaction!

The financial industry would be crazy not to jump on this opportunity, and indeed they have. Prices will go up forever. This time is different. Interest rate rises? Naah, that was then, this is now. Let us invest your money for you; it will only cost you 3% and we'll surely make 10%*, in fact last year our analysts were so brilliant they made 18%! Imagine that for your future! (*past investment returns are no guarantee as to future returns; actually, if you'd invested in the index a year ago without knowing anything about shares you would have made 21% because you wouldn't have paid our fat-assed analysts anything for following the rest of the sheep, but we try to keep that quiet.

About 10 years ago I read a book called One Up on Wall Street, by a fund manger called Peter Lynch. If you are one of the suckers looking around at the moment thinking the market will go up forever, I strongly advise you get a copy and read it. It's American but its lessons (as opposed to Leesons) are universal.

It is time to cut out the middleman. All the research is there for you. If you just want to double your money overnight, listen to the guy next door who's got a tip in Race three. In truth, he's as useful as the work experience kids who occupy the financial industry, because they're all working on the same rule book.

Funnily enough, they all now seem to agree that the resources boom is here to stay for the foreseeable future. Six months ago none of them wanted anything to do with it.

Funny that. All I can say is I'm glad I ignored the "analysts" I had contact with. I was buying shares when a lot of them were in short pants, and folks, experience is a better teacher than rule books.

Lance Murdoch
2nd Feb 2006, 17:08
Quite right Binos, most of the stuff said about the stock market is nonsense. I have long suspected that fund managers are more concerned with not loosing more money than their competitors than they are in making you money.
The best tool for picking stocks is to ignore all the bull:mad: spouted by the self appointed 'experts' and use some common sense. A knowledge of psychology is more useful in predicting stock market behaviour than a knowledge of economics.
An example of this is the resources boom which you mentioned. A few months ago the 'experts' were saying that oil would fall back to $30 a barrel, now they think it will stay at $55-$70. It is obvious that a resource that is becoming more scarce at a time when demand is increasing will go up in price.

None of the above
2nd Feb 2006, 17:11
Woody Allen said that a stockbroker was 'someone who invests your money for you until it's all gone'.

snow goose
2nd Feb 2006, 17:33
BINOS (and Woody Allen)

Just another “profession” proven full of holes when relieved of its own “internal investigations”, or subject to online scrutiny.

Before the internet I was expert at market bottoms when selling and at tops when buying. “They” knew I was coming.

No more of that nonsense. Brokers still do it for me (1.5% max each way) but know that I am watching on my screen. No problems for years until recently.

…Recently? Dodgy broker? I have printed records for the hour and the day which always match………er… not this time, by 10% no less. Broker flips pages of his admirable book of excuse jargon……

Gotcha!

Antics of Mutual Funds could be a whole new thread. Money (not stocks!) funds where income looks good and gets “re-invested”….but funds assets slid year on year.

Ponzi, neh?

We also had the “Prudent Broker” who sold our gold at a market bottom and I naturally bought a smidgen to help our British cause.
The market has since doubled….thanks…but Prudence could even win some of that.

SG

Jerricho
2nd Feb 2006, 19:06
Remember our discussion at The Pineapple about them bastards Binos? Do the opposite of what they tell you ;)

Binoculars
3rd Feb 2006, 01:26
Indeed Mr J, but that would imply I talk to them in the first place. Did your old man perform his mumbo jumbo on those shares I was talking about?

Jerricho
3rd Feb 2006, 11:31
Aye laddy.........

I left the beer coaster with all the important details on his desk before we went to Melbourne. He's got a couple of domestic issues to deal with, but I believe he's on it.

Binoculars
3rd Feb 2006, 12:49
With his bumbling sons off his hands and a delightful wife such as his, what domestic issues could your father possibly have? :}

Never mind, the share I mentioned I hope never to sell anyway! (Saves brokerage, you know.)

Charlie Foxtrot India
3rd Feb 2006, 14:35
So, any hot tips, Binos? :)

I love clicking "refresh" on the c***sec site and watching my money grow..(or shrink today! :{ )

And not a stockbroker in sight, just $19.95 a trade.


"Greed Is Good"

Jerricho
3rd Feb 2006, 15:08
So, any hot tips, Binos?

I've got a hot tip for you.......don't listen to Binos when it comes to betting :p

Stockpicker
3rd Feb 2006, 19:07
the share I mentioned I hope never to sell anyway! Does that mean you'll never make any money on it, Binos? :} ;)

Binoculars
3rd Feb 2006, 23:36
Yep. The same way I've not made any money on my house. := Are you suggesting I sell up everything and put the cash in the bank? Dunno about north of Hadrian's Wall, Ms S, but companies over here pay things called dividends. :=

CFI, I gave the tip to all Ppruners two years ago and said thank me in three years. The first year required patience, but the journey is now well underway. You'll have to search for it though, for not listening the first time round. :ok: I'll give you a freebie though; don't invest in any company that has its HQ in your home state!

Charlie Foxtrot India
4th Feb 2006, 05:23
Aw, it's not that I wasn't listening, I only started doing the share thing a few months ago!:cool: