Broker research: Hot or not?

A client calls his broker and asks what he thinks of stock XYZ. The broker replies, ‘are you buying or selling’.It’s an old gag that makes a useful point: As long as the client is buying or selling and not holding, brokers are happy.The subtle purpose of broker research supports this intention. It isn’t designed to identify long-term value because brokers want you to trade, now.While the economic rationale is obvious, the terms used to hide it can be mind-bendingly complex. Check out the fine print from one broker:‘Overweight, Equal-weight … and Underweight are not the equivalent of buy, hold...

A client calls his broker and asks what he thinks of stock XYZ. The broker replies, ‘are you buying or selling’.

It’s an old gag that makes a useful point: As long as the client is buying or selling and not holding, brokers are happy.

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