Re: Confusion About Stock Broker

From: "jon.r.lomme" <jon.r.lomme@ac.com>
Subject: Re: Confusion About Stock Broker
Date: Fri, 22 Aug 1997 22:37:28 -0400 (EDT)

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Dear Nancy,

This guy sounds fishy, even ignoring the confusion that's been going on with 
who's buying out who and who's going under.  I see at least two classic warning 
signs here:  cold-calling and frequent trading.  Always be skeptical of a 
broker who recommends frequent buys and sells, he may be churning you for 
commissions.  Was the money involved in these trades a substantial portion of 
your portfolio or just a small amount that you had set aside specifically for 
these 'speculative' type activities?  I ask because if he's pushing you to jump 
in and out of volatile stocks with all of your money at once, he probably 
doesn't have your best interests at heart.  I am a subscriber to the 'buy 
(quality) & hold' philosophy, especially if you still have a relatively small p
ortfolio.  Too many people with better access to information are out there 
trying to 'time' the market for your broker to have a significant edge over 
them.  Your guy may have made you a little money this time, but it may just be 
due to the amazing bull market we have enjoyed over the last couple of years 
rather than his keen stock-picking skills.

If you are going to use a broker, you have a right to one you feel comfortable 
with, especially if you are paying full-service rates.  Never stick with anyone 
who pressures you or coerces you into transactions you don't understand and 
feel comfortable with.  Talk to friends and family that have had positive 
long-term experiences with their brokers and see if they can point you to 
someone that better meets your needs.  And browse through the investments 
section of your local bookstore.  There are a number of resources out there 
that can take a lot of the mystery out of investing.

Good luck,

Jon Lomme
Andersen Consulting LLP
jon.r.lomme@ac.com

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