The Rant: Alpha Teach Yourself Investing in 24 Hours: An Analysis (part 14)

Mission Statement

Monday, November 6, 2017

Alpha Teach Yourself Investing in 24 Hours: An Analysis (part 14)

Picking a Broker

Charles Lamson

Before we spend a lot of time discussing how to pick the right stockbroker for you, we need to answer a broader question: Do you even need a broker?

If you plan to put your investment dollars into no-load mutual funds exclusively, then you are dismissed from this class. You do not need a broker to buy mutual funds. By the way, investing exclusively in mutual funds is a common and sound strategy.

However, many people want a more hands-on involvement with investing decisions and are interested in owning individual stocks as well as mutual funds. This is a fine strategy also.

The writer of this book being analyzed Alpha Teach yourself Investing, Ken Little, cautions against beginning investors owning just individual stocks. Mutual funds provide a diversity of investment that a beginning investor owning just individual stocks cannot achieve, especially on a modest investment budget.

With those cautions in mind, let us look at stockbrokers.

Why Do I Need a Broker?

Brokers provide the link between you and the stock market. Except under unusual circumstances, which we will look at in a later post, you need this link to buy stocks, bonds, and many other financial instruments, but not no-load mutual funds.

One of the reasons you do not need a broker to buy mutual funds is that they, for the most part, are bought from the mutual fund company. When you sell your mutual fund holdings, the mutual fund company buys them back from you. Thus there is no need for an intermediary.

JUST A MINUTE

As we will see in upcoming posts, no-load mutual funds keep fees low by dealing directly with investors.

When you buy stocks, you are purchasing the shares from another investor, not the company. There are some exceptions, but for the vast majority of trades, this is the case.

Matching the buyer with the seller is a function of a very sophisticated market system. Your access to that system is through a broker. Your broker has the network connections to execute simple transactions in a matter of seconds.

In addition to accessing the market, the following sections will cover some common considerations that apply to all brokers.

SIPC Insurance

Securities Investor Protection Corporation (SIPC) offers insurance to protect your account at a brokerage firm. Do not use a broker that is not covered by this protection.

SIPC insurance protects your assets in the event the brokerage you are using fails. Maximum coverage is $500,000 per account, although some firms purchase more. SIPC is like the FDIC protection of your bank deposits, although it is not backed by the federal government.

This insurance will not protect you against bad investment decisions or an errant stock market. SIPC insurance comes into play when a brokerage fails or substantial fraud is discovered. Regulators will contact account holders with claim information.

Consumer Protection

Consumers do have some protection against brokers who screw up their trades or accounts through neglect, incompetence, or fraud. The National Association of Securities Dealers (NASD) is the primary regulatory body for brokers.

You can contact the NASD through their Web sight: www.nasd.com or one of their district offices.

The NASD licenses individual brokers and brokerage firms. Individual brokers must pass a series of tests and a background check to be licensed to sell securities. There are several tests that cover different products.

JUST A MINUTE

Do not let a dispute with a broker go unresolved. There are systems in place to make sure the consumer is protected. The NASD has a complaint system in place through their Web site or district offices.

The people who supervise brokers also must pass examinations, and brokerage firms are required to meet certain standards. If a firm fails to maintain its records and accounts or fails to adequately supervise its brokers, the firm could lose its ability to do business.

Consumers who have complaints against brokers or their firms can petition the NASD if their concerns are not properly addressed.

The NASD regularly yanks broker's licenses for a variety of infractions, and more rarely, closes down brokerage firms.

Stock Certificates

Some investors want to take possession of the certificates of stock they buy. It may give you some pleasure to drag the stock certificates out every once in awhile to look at them, but it is a bad idea to keep them in your possession.

TIME SAVER

Stock certificates are a relic of the past. You are better off not taking possession and risk losing them.

Most brokers recommend you keep your stock in a "street name," which means they keep the certificates for you. In reality, there may not be an actual certificate unless you request it. Most transactions are recorded electronically.

If you insist on keeping possession of your certificates, put them in a safe deposit box at your bank. Lost certificates can be replaced, but it is a big headache and may cost money.

*ALPHA TEACH YOURSELF INVESTING IN 24 HOURS, 2000, KEN LITTLE, PGS. 111-113*

END

No comments:

The kingdom of God is among you

Luke 17:20-25 Asked by the Pharisees when the kingdom of God was to come, Jesus gave them this answer, ‘The coming of the kingdom of God does not admit of observation and there will be no one to say, “Look here! Look there!” For, you must know, the kingdom of God is among you.’ He said to the disciples, ‘A time will come when you will long to see one of the days of the Son of Man and will not see it. They will say to you, “Look there!” or, “Look here!” Make no move; do not set off in pursuit; for as the lightning flashing from one part of heaven lights up the other, so will be the Son of Man when his day comes. But first he must suffer grievously and be rejected by this generation.’

Live Adoration from Tyburn Convent

Adoration, also known as Eucharistic Adoration, is a Catholic prayer in front of the Blessed Sacrament. It is a sign of devotion and worship to Jesus Christ, who is believed to be present in the consecrated host. During adoration, Catholics pray to Jesus Christ before the Eucharist at their local parish. The Eucharist is typically kept in a tabernacle at the parish church, and may be presented in front of a closed tabernacle or in front of the exposed host in a monstrance. A monstrance is a vessel used in Roman Catholic, Anglican, High Church Lutheran, and Old Catholic churches. It is a stand made of precious metal that holds the Blessed Sacrament during adoration. The word "monstrance" comes from Latin and means "to show".

Love

1 Corinthians 13:4-7: Love is always patient and kind; it is never jealous; love is never boastful or conceited; it is never rude or selfish; it does not take offence, and is not resentful. Love takes no pleasure in other people’s sins but delights in the truth; it is always ready to excuse, to trust, to hope, and to endure whatever comes. 1 Corinthians 13:8-9,13: Love does not come to an end. But if there are gifts of prophecy, the time will come when they must fail; or the gift of languages, it will not continue for ever; and knowledge – for this, too, the time will come when it must fail. For our knowledge is imperfect and our prophesying is imperfect. In short, there are three things that last: faith, hope and love; and the greatest of these is love. Colossians 3:14-15: Over all these clothes, to keep them together and complete them, put on love. And may the peace of Christ reign in your hearts, because it is for this that you were called together as parts of one body. Always be thankful.

It is not peace I have come to bring, but a sword

Jesus instructed the Twelve as follows: ‘Do not suppose that I have come to bring peace to the earth: it is not peace I have come to bring, but a sword. For I have come to set a man against his father, a daughter against her mother, a daughter-in-law against her mother-in-law. A man’s enemies will be those of his own household. ‘Anyone who prefers father or mother to me is not worthy of me. Anyone who prefers son or daughter to me is not worthy of me. Anyone who does not take his cross and follow in my footsteps is not worthy of me. Anyone who finds his life will lose it; anyone who loses his life for my sake will find it. ‘Anyone who welcomes you welcomes me; and those who welcome me welcome the one who sent me. ‘Anyone who welcomes a prophet will have a prophet’s reward; and anyone who welcomes a holy man will have a holy man’s reward. ‘If anyone gives so much as a cup of cold water to one of these little ones because he is a disciple, then I tell you solemnly, he will most certainly not lose his reward.’ When Jesus had finished instructing his twelve disciples he moved on from there to teach and preach in their towns.

The beheading of John the Baptist

Matthew 14:1-12 Herod the tetrarch heard about the reputation of Jesus, and said to his court, ‘This is John the Baptist himself; he has risen from the dead, and that is why miraculous powers are at work in him.’ Now it was Herod who had arrested John, chained him up and put him in prison because of Herodias, his brother Philip’s wife. For John had told him, ‘It is against the Law for you to have her.’ He had wanted to kill him but was afraid of the people, who regarded John as a prophet. Then, during the celebrations for Herod’s birthday, the daughter of Herodias danced before the company, and so delighted Herod that he promised on oath to give her anything she asked. Prompted by her mother she said, ‘Give me John the Baptist’s head, here, on a dish.’ The king was distressed but, thinking of the oaths he had sworn and of his guests, he ordered it to be given her, and sent and had John beheaded in the prison. The head was brought in on a dish and given to the girl, who took it to her mother. John’s disciples came and took the body and buried it; then they went off to tell Jesus.

Psalms 9:16

The LORD is known by the judgment which he executeth: the wicked is snared in the work of his own hands. Higgaion. Selah - Question: What does Higgaion and Selah mean? Answer: Both Higgaion and Selah are used numerous times in the Old Testament. They occur together in Psalm 9:16. The meanings of these words are uncertain. We observe Higgaion in such passages as Psalm 9:16; 19:14; 42:3; Lamentations 3:63. In Arabic, the root gives a deep vibrating sound, like the murmering sound of a harp (Psa. 92:3). The International Standard Bible Encyclopedia states that it may be derived from the Greek versions of Psalm 9:16 and takes it to mean an instrumental interlude. It may also mean a soliloquy or meditation such as concerning the judgment of God (Psa. 9:16), the words and work of God (Psa. 19:14), and the loving kindness and faithfulness of God (Psa. 92:2-3). In the Septuagint, Selah is translated as daplasma (meaning a division). It occurs in Habakkuk 3:3, 9, 13 and 71 times in the Psalms. It is used in 39 of our 150 psalms. Of those 39 psalms, 31 they are ones handed over to "the chief Musician." So, pause and meditation may be the predominate idea. In addition, it may mean to lift up (Hebrew, salal) or, in some definitions, a repetition, end of a strophe, or a recurring symphony. In his sermon named "HIGGAION!" about Psalm 9:16, Archibald G. Brown, on August 17, 1873, at the East London Tabernacle said this: "When the psalmist wrote this verse, and reached the words 'The wicked shall be snared in the work of his own hands', he seemed to be overpowered at the terror of the thought, and so put a full stop and wrote in the word 'Higgaion!' As much as to say, 'O my soul, meditate on the tremendous truth my hand has penned, and let all who read the same meditate.' And then after 'Higgaion' he puts 'Selah'. He would have there to be a solemn pause. Oh, I would that there could be just one moment's solemn pause in our meeting tonight. Would that there could be a Selah, a Higgaion! Friends, shall there be? I put it to you. 'The Lord is known by the judgment which he executes; and the wicked shall be snared in the work of his own hands!" Now let us just for a moment meditate on that. Let there be a solemn Higgaion, and let every heart ask itself the question, 'How do I stand in reference to this tremendous truth?' *Answer by Dr. Joseph R. Nally, Jr. (https://thirdmill.org/answers/answer.asp/file/47892)*

The Rant

Mission Statement

Monday, November 6, 2017

Alpha Teach Yourself Investing in 24 Hours: An Analysis (part 14)

No comments:

Post a Comment

As St. Paul gives witness to in his own life, "This is no longer my life, but Christ living in me." How do I witness Christ living in me?

The Charles Lamson YouTube Channel