Even Stockbrokers Want to Feel That They Are Doing Good Work


Valuation-Informed Indexing #141

by Rob Bennett

I received a telephone call from a stockbroker a few months ago.

Bonhoeffer Fund July 2022 Performance Update

Screenshot 27Bonhoeffer Fund's performance update for the month ended July 31, 2022. Q2 2022 hedge fund letters, conferences and more The Bonhoeffer Fund returned 3.5% net of fees in July, for a year-to-date return of -15.8%.   Bonhoeffer Fund, LP, is a value-oriented private investment partnership for . . . SORRY! This content is exclusively for Read More

I’ve never used the services of a stockbroker. In ordinary circumstances I wouldn’t stay on the phone long enough for one to make a pitch. This case was a little different and I stayed on long enough to come to feel some sympathy for the voice on the other end of the line.

This fellow was calling from the brokerage firm that my dad used when I was a boy. I remember getting phone calls for my dad those many years ago. When the fellow used a name that brought back those memories, it softened my heart just enough for me to listen to what he had to say for a few minutes.

I don’t think stocks are worth buying at today’s prices. And, even if I did, I invest in index funds. So I don’t need the services of a broker. And even if I decided that I wanted to buy individual stocks, I wouldn’t use a broker’s advice to choose them. So there was zero chance that I was going to take advantage of the services that this fellow was offering. But I decided to hear him out, feeling that perhaps one of us or even both of us would learn something from the exchange.

I learned something.

I exited the exchange feeling sympathy for the guy.

To explain why, I probably need to first note my general attitude toward people who try to make money from me by trying to obtain a commission by selling me stuff. I generally don’t like this sort of thing. I never used the services of a travel agent to arrange a vacation. In my two purchases of homes, I used a real-estate agent for one of them and avoided doing so in the purchase of the other. I think real estate agents are overpaid for the services they offer. But I think they provide value. I am not enthusiastic about their involvement. But I am not hostile towards them.

I have had good experiences with used-car salesmen. They are generally as sleazy as people make them out to be. On the surface. But they do follow a certain code of honor. My experience has been that, if you work hard for a deal, a used-car salesman will honor his word. You just have to tune out a lot of baloney and come to the dealership armed with enough information to know how to put up a good fight. Used-car salesmen might not be people of the highest possible integrity. They are trying to make a buck. But they are not monsters. They work hard. They add something of value to the world.

I think this is true of stock brokers. They are not for me. But there are lots of people who want someone to hold their hand when they are thinking of what stocks to buy. Brokers play a useful role in such circumstances. The reason they are still around is that the market is telling us that a good percentage of the people who buy stocks want them around.

I thought that