Straight talk about todays markets
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A funny sketch about whether or not you should believe the firms on Wall Street
Archive for the ‘Scam’ Category
A true story about how stock brokers work
Thursday, December 13th, 2007 |This is a true story from „The Smartest Investment Book You’ll Ever Read” by Daniel R. Solin. After publishing his previous book „Does Your Broker Owe You Money?” he started to receive a lot of unbelievable stories from people who work or used to work in brokerage firms.
Here is an excerpt from the book:
One of my favorites was told by a man who had left work with a major brokerage firm in order to advise clients to invest for market returns. He told me about the training he had received a few years earlier when he started work with a major – and well-respected – brokerage firm. He and the other brokers in training were told to split their potential client list in half. They were told to call half and tell them to buy a particular stock. The other half were to receive calls telling them to sell the same stock.
In two weeks, these “financial advisor” trainees were told to see which way the stock had moved, up or down. Whichever way it had moved, half of the potential client list would think the trainee was pretty smart, to be able to pick a stock like that.
They were told to split “successful” half of their group again, and to the same thing: tell half that a stock would go up and half that the same stock would go down.
If they did this three times, and started with a call list of 120 potential clients, after three “successful stock picks” they should then have fifteen “warm leads”, people who had enough confidence in their ability to pick stocks to become clients.
Talk about a scam! This is why I prefer to take care of my stock portfolio myself.
But at least now you know how to start when you are opening your own brokerage firm one day…
