Unbelievable: How Stock Brokers Really Work

Unbelievable: How Stock Brokers Really Work

by Roman on June 2, 2008

Here is an unbelievable true story from The Smartest Investment Book You’ll Ever Read by Daniel R. Solin.

One of my favorite stories was told by a man who had left work with a major brokerage firm. He told me about the training he had received a few years earlier when he started work with a major and well-respected brokerage firm. He and the other brokers in training were told to split their potential client list in half. They were told to call half and tell them to buy a particular stock. The other half were to receive calls telling them to sell the same stock.

In two weeks, these “financial advisor” trainees were told to see which way the stock had moved, up or down. Whichever way it had moved, half of the potential client list would think the trainee was pretty smart, to be able to pick a stock like that.

They were told to split the “successful” half of their group again, and do the same thing.

If they started with a call list of 120 potential clients and did this three times, they had 15 “warm leads” – people who had enough confidence in their ability to pick stocks and to become clients.

Unethical selling tactics by people who really don’t have a clue what’s going on is the reason I am taking care of my own stock portfolio – and you should too.

However I have to agree that this story gives a great example how everyone could start their own brokerage company without knowing anything about stocks! :twisted:

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