Usta be a radical - usta be a stock picker. Found it was not cost effective from a time point of view. So I’m not helping answer your question, just make sure you are really adding value and it is worth your time, since it is a long term strategic investment, in terms of positioning with your clients and their friends.

About 85% of my business is stock and bond business. 99% of those accounts are commission based. Consequently my velocity on assets is awful, but clients are happy

Trust me, it is very cost effective.  For every $10MM in assets we gross about $500,000/year.  We have 40 years of experience, our goal is 20-40% or better returns in a 6-12-18 month time period.  I leverage my partner’s success in the U.S. Stock Championships that were featured in Investor’s Business Daily and Barron’s where he placed as high as 3rd in the nation.  The positioning is great because no one else does it and we’ve developed our own proprietary strategies.  We are currently expanding our services to capture more “mainstream” conservative investments.  

Stocks are the American Dream.

As sooned as "everyone" transitions to fee-based, the stockpicking broker will be in high demand.

In my opinion.

Without individual stocks, this job would be boring to me.

[quote=FreeLunch]

Without individual stocks, this job would be boring to me.

ive been doing more individual bond and preferred stock business lately. it's hard to be a "true stockbroker" in a bank.

when i started at a wirehouse i built a book on individual stocks, unfortunetly the stocks i picked went down

[quote=wallstreeter]Trust me, it is very cost effective.  For every $10MM in assets we gross about $500,000/year.  We have 40 years of experience, our goal is 20-40% or better returns in a 6-12-18 month time period.  I leverage my partner's success in the U.S. Stock Championships that were featured in Investor's Business Daily and Barron's where he placed as high as 3rd in the nation.  The positioning is great because no one else does it and we've developed our own proprietary strategies.  We are currently expanding our services to capture more "mainstream" conservative investments.   [/quote]

This is pretty hard to believe. No way you are pulling 5% off principle, in up and down markets, unless you have a steady stream of suckers. If this is a 40 year phenomenon, it would have been mentioned in my CFP study materials. Sorry.

[quote=GolFA]

[quote=wallstreeter]Trust me, it is very cost effective.  For every $10MM in assets we gross about $500,000/year.  We have 40 years of experience, our goal is 20-40% or better returns in a 6-12-18 month time period.  I leverage my partner's success in the U.S. Stock Championships that were featured in Investor's Business Daily and Barron's where he placed as high as 3rd in the nation.  The positioning is great because no one else does it and we've developed our own proprietary strategies.  We are currently expanding our services to capture more "mainstream" conservative investments.   [/quote]

This is pretty hard to believe. No way you are pulling 5% off principle, in up and down markets, unless you have a steady stream of suckers. If this is a 40 year phenomenon, it would have been mentioned in my CFP study materials. Sorry.

[/quote]

2.5% on the buy, 2.5% on the sell.  Most stocks usually turn over between 6-12 months, some sooner, some later.  For instance, yesterday we sold BPHX.  Originally purchased on 5/30/2007 at 9.688, sold at 13.00.  So we held it for a month and a week, made 34% on it.  Only a handful of clients were in that position, so that money turned over.  When really big positions move we will have 50,000 to 75,000 shares and do a block order.  We then reinvest and so forth.  Not all the stocks are winners, but 85% of them are.  5% on the principal is an average, but over the years that's what it equates to.  We find emerging growth stocks and turnaround situations.  We don't invest in blue chips.  We find stocks before 99% of people do and we may buy 6 months or 1 year early, but when they move, it happens quick.  If you are having a tough time understanding or believing this, just think about what it was like before the regulatory bodies cut the commissions in half, from 5%/buy and sell to 2.5%.  Hence, our production was cut in half.  Most of our clients have been with us for years.  And yes, a bad market can hurt, but when we scan for stocks, we try to find the ones about to break out, and in every market, good or bad, there will always be some stocks doing well.

[quote=GolFA]

This is pretty hard to believe. No way you are pulling
5% off principle, in up and down markets, unless you have a steady
stream of suckers. If this is a 40 year phenomenon, it would have been
mentioned in my CFP study materials. Sorry.

Let's say you have an intelligent prospect that comes in with $500,000.

I'll tell you what I like to do:

With $400,000 build a well-balanced mutual fund portfolio.

With the other $100,000 - have $80,000 worth of "core" solid companies (about 4 - $20k a piece), and leave about $20,000 to do some more aggressive trades.

It keeps you in touch with them.  It helps people have something to "pull for"

If you own $20,000 worth of Apple, GO APPLE!

[quote=AllREIT] [quote=GolFA]

This is pretty hard to believe. No way you are pulling 5% off principle, in up and down markets, unless you have a steady stream of suckers. If this is a 40 year phenomenon, it would have been mentioned in my CFP study materials. Sorry.

[/quote]

It's called churning, and it was mentioned.
[/quote]

Let me put it this way: Our policy with our clients is that if we trade a position and they did not gross 20% profit, we take our commission out.  We don't make money unless they make money.  This is what makes us unique.  Everyone out there is getting their CFP, but we are literally offering something they can't get from the majority of financial professionals out there. 

I get what you are doing, and I'm sure your suitability specs are in line with client's net worth, goals, risk tolerance. Managed funds, which are passive from advisor's and client's POV, strive to do the same - and if there is a premium to the risk, who cares about fees.

What really interests me, though, is the potential for a perfect storm, in terms of the principal, do you sell everything off in a down market verus a buy and hold strategy - there are times, like around 2000 and then through 9/11, when the whole market is down, I guess you could focus on sectors and individual research - but your risk of losing prinicipal or not getting paid goes way, way up.

Buffet extracts high returns because his holding period is forever. You get paid no matter what, your clients must understand what you are doing and have the portfolios to handle income and such from other pockets.

Wallstreeter - What is your policy on Short-Selling?

What Percent of your book is short positions?

[quote=wallstreeter][quote=AllREIT] [quote=GolFA]

This is pretty hard to believe. No way you are pulling 5% off principle, in up and down markets, unless you have a steady stream of suckers. If this is a 40 year phenomenon, it would have been mentioned in my CFP study materials. Sorry.

[/quote]

It's called churning, and it was mentioned.
[/quote]

Let me put it this way: Our policy with our clients is that if we trade a position and they did not gross 20% profit, we take our commission out.  We don't make money unless they make money.  This is what makes us unique.  Everyone out there is getting their CFP, but we are literally offering something they can't get from the majority of financial professionals out there. 

[/quote]

This post in while I was writing. I don't mean the CFP means anything special, so let's focus on you not getting paid if your client does not get 20% gross profit. You ran this business through the last downturn?

GOLFA

HE'S GOT TO BE ABLE TO SHORT.  THAT IS HIS ONLY HOPE.

If they're averaging 20-40%, I'm surprised they haven't got some serious backing to start a Hedge Fund.

I mean really.  That's where the big bucks are.

You got it, FreeLunch. He’s swimming in a more dangerous lake, but somebody’s gotta do it.

[quote=GolFA]

I get what you are doing, and I'm sure your suitability specs are in line with client's net worth, goals, risk tolerance. Managed funds, which are passive from advisor's and client's POV, strive to do the same - and if there is a premium to the risk, who cares about fees.

What really interests me, though, is the potential for a perfect storm, in terms of the principal, do you sell everything off in a down market verus a buy and hold strategy - there are times, like around 2000 and then through 9/11, when the whole market is down, I guess you could focus on sectors and individual research - but your risk of losing prinicipal or not getting paid goes way, way up.

Buffet extracts high returns because his holding period is forever. You get paid no matter what, your clients must understand what you are doing and have the portfolios to handle income and such from other pockets.

[/quote]

Great question.

Of course there could be a perfect storm, but we've been doing this for 40 years.  Actually, we will never sell everything off.  We've developed about 5 different techniques.  All of these techniques are derived from decades of research from looking at 1000's of charts/night.  One of these is what we call the Base Range Strategy.  These stocks had huge highs and have come down significantly.  Once they meet our criteria, we buy.  A lot of the downside has already been taken out.  Once it starts to turn up, you know something is up with the company.  Remember, fundamentals look backwards, technicals show you what's coming.  In bad markets, these Base Range stocks hold their own very well.  Say we like a stock and it has a good range from 6-9, we may buy at 6 or at 9, you really just can't tell sometimes.  So over a year it could trade anywhere in that range, then all of a sudden the stock breaks out and we sell. 

Take a look at the ticker FORD.  We found this company was starting to break out of its base in 2004.  We do some research, see that they made the leather carrying cases for Motorola cell phones, see that they are landing a contract to make cases for Ipod's and we buy at the mid-3's to mid-4's. A year later we take our gains in the 21-22 range and take the 500+% profit.  This was a grand slam to say the least but that's some of what we look for.

[quote=FreeLunch]

Wallstreeter - What is your policy on Short-Selling?

What Percent of your book is short positions?

[/quote]

We do short, but only for clients with over $1MM.  Also, we only short if they are 100% covered.  We don't do it much and actually we aren't short anything right now.  We feel the market will go up to 18,000, any bumps along the way are just that, small bumps and the stocks will weather the storm.  Our clients are very well diversified within their portfolios as well. 

[quote=FreeLunch]

GOLFA

HE'S GOT TO BE ABLE TO SHORT.  THAT IS HIS ONLY HOPE.

If they're averaging 20-40%, I'm surprised they haven't got some serious backing to start a Hedge Fund.

I mean really.  That's where the big bucks are.

[/quote]

As far as the hedge fund is concerned, it's been brought up.  I would consider it, but I'm half of this operation (lucky sperm club), and we are happy where we're at.