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No. of Recommendations: 10
have a 22 year duration client with a 16% annualized return (past performance is no guarantee) who just pulled money from me to buy a stock because 'a friend who knows a hedge fund manager is doing really great and I want you to buy this'; he knows zilch about the company other than this guy telling him that 'when he gets to 4m he will retire'....
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No. of Recommendations: 1
with a 16% annualized return

gimme gimme.

He doesn't deserve what he got and I hope he didn't pull a lot. Give me 16% for 7 years and I will retire.

does buying it for him in his account with you wreck computing your returns?
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No. of Recommendations: 1
does buying it for him in his account with you wreck computing your returns?

no, just creates more work
we will open another taxable account ('unmanaged') and
I will move this stock over to that account
and then go back and erase any sign of this transaction in the managed side
(I'll put a note in his file to document the whole thing)

ordinarily, it would have been nicer for him to open the account himself but he wanted the stock immediately; only the 2nd time this has happened in 23 years...
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No. of Recommendations: 4
Clients are funny things.

This reminds me of a time, oh let's say 100 years ago it feels like, I was on an equity strategy team at a Big Bank and we started doing short-term trading ideas. We had a nice model that incorporated some TA, but the key was we were always using catalysts that we thought would move good stocks we already liked, using research from a multitude of banks so not just the house view. M&A, earnings, revisions, commodity price changes, price hikes, etc.

So, our theory was that you would recommend every stock to your die-hard trader clients who loved 'action' and were trading like crazed weasels anyway, and maybe they'd win instead of always losing for a change.

We rec'd hi-growth, low-growth, value, turnaround and cyclical/commodity names and made sure it was a diversified basket even though you might only own the name for a couple of weeks. We generally came up with at least one name a week [weekly screen].

Our exits were 10% up or 7% down, or if nothing happened for a while after the 'catalyst,' we'd just exit and mark that a winner or loser at that time. Nor were we willing to blame a down market for a loser, if the market fell 9 and we fell 7% that's a loss. Or even 2% that's a loss if no impact from catalyst. In fact, we didn't call it a winner if you didn't make at least 1% to cover any possible trading costs [which of course were much lower even then.]

Well, we started out like house on fire. Nailed our first 7 in a row all in different industries from oil to software to cable to razors.

I'm pretty sure we were 23-10 when I got a call from one of the FAs in Los Angeles*. He had a client who was very upset with our picks!

I said, 'What are you talking about? We're hitting like 70% with a 1.4 upside to downside capture ratio!'

Oh, he said, this client had done 7 of the picks, and ALL 7 had gone down.


'Did you tell him he's supposed to buy all the names and not pick and choose among the few stocks we've already picked out of 9000 stocks? That is the point of the whole exercise, so if one sector gets hit you don't lose everywhere.'

"Yeah, but he didn't like those other names."

I hung up at this point.

Clients. SMH.

* A couple of years later, this FA went to jail for insider trading. I wondered if the same client was involved. Never found out though.
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No. of Recommendations: 1
Is it a GOOD stock??? Inquiring minds....
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No. of Recommendations: 1
it is a chemical company (I won't disclose the name - sorry)
not what you would expect
I was thinking it would be a SHOP or one of those type
fat top line with limited earnings or no earnings
doesn't appear to be buy and hold though
all the stocks he mentioned were chemical companies
appeared to be specialized knowledge involved perhaps
cause there was nothing obvious about any of them
and each had experienced a big run

I had a client who owned - name escapes me (walter industries?)
but it was where she worked
she got it thru 401k and then rolled it over to me
but I put in an unmanaged account
absolutely not in my wheelhouse
thing is, that stock went up 10x in short order
but she didn't follow it and didn't sell a share
eventually she had me sell it at a loss
no kidding - this is a 100% true story

I learned a couple things
1) never talk a client out of a stock they might want - it might be a tenbagger
2) if a client wants that stock, you keep your mouth shut but suggest they buy it elsewhere
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