by MF Shrimp

I know we've all been there. We've all listened. We've all believed. But why does that happen? Why do we listen? Why do we believe?

First, let me assure you that being in the brokerage business doesn't insure immunity. It doesn't create automatic skepticism. I know; I was there. What it does often do is create know-it-alls. Like me, as close as three years ago. Even two years ago. What do I mean by know-it-alls? Well, we believe we could spot a bad call from a mile away. We're privy to all the pertinent information, after all. We know how to spot a good company. We can even track the market and know what will happen. We're in the business. Right? Poppycock.

I learned early on that the brokers aren't gods. That was a tough lesson to learn, but it didn't take long. They make mistakes. They let their enthusiasm carry them away. And as loyal employees, we followed. Thus, we learned hard lessons. I remember being convinced to buy Herbalife, just a couple of months before it plummeted. That was the type of thing that led me to believe that brokers didn't know all.

So, I should have learned from that to do my own research, right? Wrong. I was too smart for that. While the broker could be wrong, the chances that the Branch Manager would be wrong were slim. I was so sure he couldn't have gotten where he was without being very good at what he does. Well, that was probably true. The problem arose in my misconception of what he did. What he did was buffalo customers better than the rest.

I went to him. I said I needed some help adjusting my portfolio. My picks hadn't been doing well, and I wanted some advice on what to look at next. He was more than happy to make suggestions. I was more than lazy enough to take them. Consequently, I bought Oak Technologies. It's a great little company, he said. It's going to fly, he said. And then, needless to say, it started going down. As I saw it going down, he kept assuring me they were doing just fine. Did I check? Did I do my own research? Of course not. I knew it all. I knew for a fact that my Branch Manager would never be so wrong. Oak Tech proceeded to tank, and I didn't catch it soon enough to get out before losing a lot of money. So, do I blame my manager? You betcha. But, I also blame me. That level of trust and naiveté is unbecoming in a broker's assistant. Now, no one watches my money but me.

So, now, when I hear that phrase "a sucker born every minute" I look around to see who's talking about me. I get a lot of folks complaining that the same thing happened to them. They badly want to be able to get their money back for such bad advice. And while arbitration can often be an answer, more often than not, the customer is simply considered at fault for being naive enough to believe what they were told. Money is rarely recovered. But for an employee of a brokerage firm, it's almost never recovered. We're supposed to know better.

My lessons have been hard. My subsequent knowledge, a blessing. My desire to clue the rest of the world in on the fallibility of brokers, an obsession. My message? If you like the stock, buy it because you know and understand the company, not because someone else told you it's great. Do your own research. I can't stress that enough. Do Your Own Research. Make your own decisions. And for crying out loud, be your own advisor! Listen to yourself. Who better than you knows what is good for you or not? Besides, you're less likely to want to sue yourself. :-)