Your Broker As a Cheat (Part 4)

There is a joke….

The Kapoor's invited their new friends  over to dinner. During dinner Mr. Kapoor was asked what he did for a living.

Eight years old Rohan jumped in and said, "Daddy is a fisherman!" To which Mrs. Kapoor replied, "Rohan, why do say that. Your daddy is a stockbroker, not a fisherman."

"No mom. Every time we visit dad at work and he hangs up the phone he laughs, rubs his hands together and says 'I just caught another fish'."

Many Stock brokers suffer from a disease – Lacunar Amnesia.  This is your average Ghajini kind of “memory loss” except one small thing – Lacunar amnesia refers to a memory loss about a particular event.  The particular event that I am referring to is the losses their clients took on the stock the broker recommended.

Walk into any broker’s den, and he will sing a song to you about all the money his clients made in a particular stock during the past week.  Ask him if there were any calls that went wrong, you will see him shifting in his chair and not just that - you will get a lecture from God.  “This is a market. You win some, you lose some.  But we have strict stop losses.  Would you like a cup of coffee or something else that I can offer you?”  Well, you should refuse the offer and tell him what he can do with his advice.


"The less you know... the more you believe"

There is nothing on earth that will induce a broker to be honest with you about the losses he generated for his clients.  The broker experiences dissonance this way.  The internal conflict between the self-delusion that he is a smart guy versus the losses he gave to his clients, is unbearable for these poor mortals.  The only resort then would be Lacunar Amnesia.

It is necessary for a broker to create a perception of “instant wealth” for you. People fall for it and it is that which gives him and his family the family dinners and the ability to invite friends over.

Happy Investing!

Copyright© Nitesh Kotecha