From Hal Felman: “Your column was right on about what the little guy gets from the brokerage house. A couple of years ago I was persuaded to switch my account from a discount house to a larger New York brokerage when my account exec moved from the discount brokerage to the new firm. I was promised great results based on the superior research at the new firm for which (I was told) large institutions paid big bucks. I questioned the research I would get for free when somebody else was paying huge sums for it. I can’t remember how I was convinced, but I fell for it. Without going into details, I was given recommendations to buy or sell six or seven stocks, not all of which I followed. Of three I bought, I am still in the hole despite the rising market. Two I was told to buy, but didn’t, have gone South. The recommendation to sell, which I didn’t follow, has gone up another 10 points. So much for ‘advice’ from brokers.”
Hal is being too harsh! In my experience, brokers are right about half the time. And they give you someone to blame when you do badly.
Isn’t that worth paying five or ten times as much commission?