BROKER'S ROLE

So What Really is the Broker's Role?David Schirmer



You see the whole stock market is a marketing organisation. It exists for the sole purpose of transacting shares from buyer to seller and seller to buyer. Someone has shares to sell and they want to find someone else to sell them in the best price possible. Someone else wants to buy shares and they want to buy them as cheaply as possible. So what really is the broker's role? By now you've probably figured out, the broker's role is not to analyse stocks nor to make you wealthy but rather to transact stocks to make a profit for both the broker and the brokerage house. In fact most brokers have no idea on how to analyse stocks nor do they have the time to do the analysis. A broker gets to work first thing in the morning and they read the financial papers and reports so that they can sound somewhat intelligent when the clients asked the question about particular stocks. Then the phone starts to ring and for the rest of the day they are simply entering phone numbers, taking orders and calling back clients. When the stock market closes at 4 PM they then have to catch up on the paperwork, and by the time that is done the last thing they want do was analyse stocks. In fact they don't have time to analyse stocks nor are they paid to do that, they are paid to transact. This is not to say there are brokers also good stock trading, but they are far and few between. The best person to analyse stocks and know what to buy and what to sell is due. It is your money and no one will look after it better than you. Quality stocks versus speculative stocks. What is the difference between trading and investing, who is a trader, who is an investor? Many people use these labels to define the time span on which they own or buy and sell shares. If they buy and sell more frequently they tend to call themselves a trader or they are trading. If they buy and hold stock or they buy and sell less frequently people call themselves an investor or they are investing. However, the correct definitions of a trader an investor is not measured by the time and which they hold the stocks, or the frequency of which they buy and sell. The only difference between a trader and an investor is the tax implications on the profit or loss of the transaction. There is a different tax regime applied to a trade then is applied to an investment. As an investor you pay capital gains tax on your investment after you have solely investment. That means if you hold the investment over a number of years then you are deferring the tax payable or the loss claimable until the year of the sale. You pay tax on the capital gains less inflation. If you make a loss on your investment you can only claim that loss against the capital gain. If your stock purchase is a trade, the tax is calculated at the end of each tax year on the realised or unrealised profit or loss for that year. If you have a loss it can be claimed against other incomes such as PAYG or business income.
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About the Author:David Schirmer has trained hundreds to people around the world to trade in the Stock Market Successfully. Go Here To find out how to trade the stock market successfully