Can we trust our broker the way we trust our doctor?

The simple answer is, no! Not even close!

When I started investing over 50 years ago, my broker convinced me that his role in my financial health was like my doctor’s role in my physical health. Medical doctors have justly earned society’s trust, ergo, I trusted him.

He knew that I had money set aside for income taxes. He stated that if he invested that money, I could pay my taxes with the winnings and have lots left over.  To make it even more exciting, he could lend me money (margin my account) and we could make even more.

Who could refuse that?

And the outcome?

He received twice as much in commission income; I received margin calls. The value of my securities had dropped and I had to repay that borrowed money by selling these securities at a loss. More commissions for my broker.

The decline in the value of my securities was not his fault, of course. He had a long list of reasons why these things happen.

To review the conflict of interest between Wall Street and Main Street go here and here.

Your broker’s skills at persuasion exceed his skills at investing by a wide margin. He will laugh at your jokes and make you feel special.

You can do much better on your own. See habit number two.

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Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me