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Subject:  Brokers, Cribbage, & Mosquitoes Date:  7/4/2006  2:09 PM
Author:  imdajunkman Number:  17386 of 36670

Jason wrote: "Stupid brokers rape the uninitiated (and everyone else for that matter) whenever and wherever they get the chance. Bah!” [Post #17385]

Ken quoted that comment and added his own: “I wish I could rec that twice.” [Post #17385]

Let me ask both of you this: Who was “stupid”? the broker or the customer?

There’s a saying that goes like this: "Fool me once, shame on you. Fool me twice, shame on me.”

Learning anything, not just investing or trading, involves making mistakes, often very painful or expensive ones that others will laugh at and/or take advantage of. Things don’t have to be that way. Learning can happen in a supportive environment. But that’s a rare exception. “Dog eat dog” better describes the “real world”, as is reflected in sayings like “paying your dues; paying your tuition”.

If either of you play Cribbage, then you know there’s a feature in the game called “Muggins”. If your opponent miscounts his points, you can point out the error and capture the points for yourself. In other words, ignorance, mistakes, and carelessness get penalized. Cribbage is just a card game. But “muggins” happens in the “real world”, too. Make a mistake, and no one else is under any obligation to forgive that mistake. Some people, maybe a lot of people, do so, because they realize that, often enough, the shoe is on the other foot. They don’t want to live in a world without tolerance and forgiveness, so they will forgive the mistake and forego taking advantage of it. [Karma, Baby. Karma.]

Brokers, by and large, are parasites who make their living by imposing themselves as middlemen in a process to which they are largely extraneous. Furthermore, to the extent that they can take advantage of customers’ mistakes is the extent to which they can further enhance their earnings. That’s the game they play. They can, and will, call “Muggins” at every opportunity. Worse, when they make a mistake, they typically disallow the customer from calling “Muggins”. A classic example of this is mispriced securities. Not two weeks ago, I saw that E*Trade was mispricing some bonds, so I wrote orders as fast as I could. Two of the orders they canceled, pleading “mispricing”. I did get a fill on one of them, and the trade was posted to my account. But by the next day, they had busted the trade, and all record of it happening had been erased. And I’ve had this situation happen before. If I try to execute on their mistake, the trade gets busted. If I make a mistake, the trade stands.

Moral? To try to live life without making mistakes imposes a huge psychic burden on freedom and creativity. The price isn’t worth paying, IMHO. The better plan is to accept the fact that not every idea is going to work out and not every action will be well thought out. Mistakes and accidents are going to happen. The best one can do is to attempt to manage their damage, and blaming brokers for acting in the ways they do is the moral equivalent of blaming mosquitoes for biting you. Mosquitoes (aka, brokers) need a blood meal to continue their species. If you don’t want to provide that blood meal, then use precautionary measures. You’re going to get bitten once in a while no matter what you do. But you don’t do the equivalent of walking naked in the woods, at least, not a second time.

Furthermore, it is very important to not get sloppy with metaphors and call something "rape" which isn't. Rape is criminal sexual violence. Losing some money (whoever's fault) isn't rape. The two are very different. There are plenty of examples of brokers who have been convicted for commiting criminal behavior. It has to be admmitted that such behavior is exceptional. That brokers generally are vicious and predacious within the limits of the law is another matter. Such behavior can be protested in a blanket manner in public forums. But the more effective action is to detail specific incidents of abusive conduct as a warning to others and then to transfer one's account.

Charlie

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