HAVE YOU LOST MONEY RELYING ON BROKERAGE REPORTS?
Ever wonder who pays the analysts who write the research reports based on which you (or at least many of you) make investment decisions? How do stock brokers manage to offer you these research reports for free?
The bias of stock brokers or sell side analysts is well recognised. We encourage you to search on the internet to understand why equity research reports issued by stock brokers are commonly influenced. The truth is, brokerages can generate sizeable commissions by making their clients buy and sell (basically anything that is tradable). The more frequently you buy and sell, the more money the stock broker will make. The more money your brokerage firm makes, the more they pay the ‘research team’. The more money the research team gets, the more research gets pumped into your mailboxes. Simply put, it is not hard to understand why you will lose money investing on brokerage reports or hot tips. The goal of such reports is not to give good advice but to convince you to trade. Just trade!
Additionally, stock brokers in most cases have asset management and investment banking departments. Which means what? The same companies whose research reports are being written by the analysts are the source of revenue for the stock brokers. Analysts at these brokerage houses spend long hours writing upbeat reports to help win investment-banking business.
Think about it, why would a stock broker pay an analyst to write high quality research report and give it out for free? Unlike traditional stock brokers we do not earn any money such as trading fee, brokerage or commission when you trade in the shares which are recommended by us.
About our Independent Equity Research Model
Our independence is maintained by:
► Having no brokerage or banking business either with institutions or retail clients or with any of the companies under coverage.
► We do not earn any commission or make any money whether you trade or not on the basis of our recommendations.
► Our only source of income is the research fee which our subscribers pay to us for giving them honest, unbiased information and idea.
► Our people are prohibited from dealing with brokerage houses and trading in any security under coverage*.
► Strict focus on equity research**.
Obviously, with such a model of business we always look forward to meeting and hearing from long term buyers. So if you have a story of persistence in a belief that made you money, we would like to hear from you.
* Our people ‘occasionally’ buy and sell equities in their personal capacity for which we maintains an AP (“Authorised person”) registration; their holding statements and interest in specific companies is regularly monitored and adequately disclosed.
** We track bullion, currencies and crude prices for their impact on equity markets
About the Author
Rajat Sharma is a well known stock market analyst and commentator. He has covered Indian markets for over a decade and is regarded for consistently identifying early stage investment opportunities. Attorney by qualification, Rajat has done extensive work for improving corporate governance and disclosure standards.Follow @SanaSecurities