Brain Snappers and Other Wall Street Nonsense by Al Thomas The last time you spoke with your broker did he use any of the following words? Diversification,Price-to-earnings ratios, discretionary trading,lifting a leg (he’s talking to you not yourdog), leverage, divergence, fee-basedcompensation, escalator clause, tactical assetallocation and other mesmerizing words to placeyou in stupefying shock. Brokers do that to let you know that you don’t know anything about the market and you mustallow them to make decisions for you. You don’tknow the language. You are just too dumb.Another mushroom. Wadda ya’ mean mushroom? Didn’t you know? Most customers are considered mushrooms.
A mushroomis grown in the dark and fed horse manure. Nowyou understand why they treat you that way. Then try to get him to explain commissionstructures of mutual funds. Oh, you’re notallowed to ask that. You might want to read page35 in the January 31, 2005 issue of Newsweekmagazine for an excellent breakdown of this WallStreet scam. Maybe you better not. You will getmad at your broker. Another one of those big words they don’t wantto discuss is redemption fees. This is an extracharge of as much as 2% of the amount that isdeducted from your check if you sell within acertain period of time. Brokerage companies tellyou it is to discourage frequent short-termtrading which adds to their cost of doingbusiness and increases the expenses that arecharged to you every year. Having owned abrokerage company I can tell you this is more ofthat brown stuff they feed to the mushrooms. The reason for redemption fees is to discourageyou from selling. You might take money out ofyour account and that must be restricted inevery way possible. Some of the biggest words are associated withthose special limited partnerships. These aredefinitely brain twisters. You can get these inreal estate, hospital construction, oil and gaspipe lines and the most confusing one of all istechnology.
And they are all guaranteed. Thatword I understand, but be sure you read the fineprint to see what is guaranteed. You rememberthe old one that they give it to you in the bigprint and take it away in the fine print. How about placing a limit bid on a secondarydistribution of a special claim on residualequity certificates? You didn’t understand that? Believe me you don’t want to. When you are solicited by your broker, financialplanner or anyone to buy any equity you mustclearly understand what you are buying. If you don’t understand it don’t buy it.
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