James Rohde wrote: >(Getting slightly off topic here...) >Whoa - are you expecting stock brokers to be rational??? C'mon, these are >the same people who will tell people to sell a stock if a company *might* >be about to miss earnings predictions (even though they still make good >profits and produce earnings, just not what they originally predicted).
As an ex-broker, I can't resist going "slightly off topic" with you. Brokers may well be sleazebags who are just concerned with generating commissions, but advice like that you mentioned is simply rational these days if the customer is a trader rather than an investor with a proper long-term focus, and many customers are traders, as irrational as that may be. It may well be irrational for "the market" to severely punish stocks for missing earnings predictions, but that is the reality. The broker didn't create the system- he is just reacting to it the way it is. Of course the broker would be giving bad advice if the investor had a long time horizon and recognized that stocks outperform all other investment classes over the long haul, so he or she shouldn't sweat short terms swings. But then a smart investor like that might well be invested in index funds, so he wouldn't have a broker to be bothering him anyway. >But then again, I don't have money in the stock market, unlike all the >poor people whose 401(k)'s went south this last year. And very thankful >for myself that I didn't (and sorry for those who did). I'm afraid I do have money in the market and have lost a bunch of it in the last three years. But as I'm getting rather long in the tooth, I also had a lot of cash and bonds, so that cushioned the blow, and I'm hoping that I still have enough time (life) left to recover and then some. But if you have no money in the market and you are always that way, I'd be curious about how you hope to support yourself in your old age unless you plan to work until you die. Stocks have outperformed inflation by a factor of 3+ since 1926, while bonds have barely outperformed and cash substitutes like t-bills hardly keep up at all after taxes. Social security doesn't look all that attractive as a sole source of income in retirement. I just started mine, but the Bush tax cuts may make it unlikely that there will be anything there for you youngsters. >IMHO, a "rational stock broker/analyst" might just be an oxymoron (No >offense intended to any members of this list)... I think brokers and analysts are usually imminently rational if its rational to act in one's self interest. Its "honest stock broker/analyst" that may be close to an oxymoron. That is why I am no longer one. Now I have to go teach my college class, so I return you to your regular (CE) programming :-) Bill ___________________________________________________________________________ To unsubscribe send a mail message with a SUBJECT line of "unsubscribe" to <[EMAIL PROTECTED]> or <[EMAIL PROTECTED]>
