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From: mazlack@ernie.BERKELEY.EDU (Lawrence J. &)
Newsgroups: net.invest
Subject: Re: Stockbroker costs
Message-ID: <11244@ucbvax.BERKELEY.EDU>
Date: Sun, 15-Dec-85 17:27:20 EST
Article-I.D.: ucbvax.11244
Posted: Sun Dec 15 17:27:20 1985
Date-Received: Tue, 17-Dec-85 04:03:33 EST
References: <11166@ucbvax.BERKELEY.EDU> <863@mmintl.UUCP>
Sender: usenet@ucbvax.BERKELEY.EDU
Reply-To: mazlack@ernie.UUCP (Lawrence J. Mazlack)
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>In article <11166@ucbvax.BERKELEY.EDU> mazlack@ernie.UUCP (Lawrence J. Mazlack) writes:
>>ALTHOUGH I USE DISCOUNT BROKERS TO HANDLE 90% OF MY TRADES, I STRONGLY
>>RECOMMEND THAT YOU CONSIDER QUESTIONS OF EXECUTION QUALITY AND BOOK KEEPING
>>QUALITY AS WELL AS BROKER COSTS WHEN SELECTING A BROKER.
>
>You forgot to mention financial soundness.  Large, well-backed firms are
>less likely to go bust than small, independent ones.  (I use Schwab, by
>the way, and have had no problems with them.  My trading volume is not
>high, however.)

I certainly agree that financial soundness is important.  However, size alone
is not the determiner of soundness. A few years ago, some of the biggest
brokerage houses went belly up.  (I wish that I could place it accurately
in time, but I think it was about ten years ago - I think that Bache was
one of them. But, I'm not sure.)  Recently, the largest seller of single
premium annuities (Baldwin-United) went under, also Continental Bank (when
it went, it was one of the top ten banks. Currently, Bank of America (owns
Schwab) is losing money hand over fist.  I don't think that any of us is
in a accurate position to judge financial soundness.  That is why I suggest
that you take delivery. I like good book work because then, if they fail, then
my recover time MAY be shorter (maybe only 7 months instead of 2 years).

>Another important point is diversity.  Don't have all your assets managed
>by one institution.  I would recommend at least having a substantial
>money market-type account separate from your brokerage account.

Agreed. I always use at least two brokers. I also use several mutual fund 
families (currently 4).  However, I manage my own non-mutual accounts.
I wouldn't trust a commision making broker to do it.  My money accounts are 
seperate.

...Larry Mazlack