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Broker recommends a stock: how much research do you do?

Old 07-31-2009, 09:19 AM
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Question Broker recommends a stock: how much research do you do?

So my stock broker (who I fish with sometimes) recommends adding a stock to my portfolio. Its not going to put me out any cash as I have some money languishing in a money market account over there.

How much research should I do on my own before I say yes or no?

What should I be looking at and where can I get the information?

I want to do a little checking around before I jump in but I don't know what makes a good stock look different from a bad stock.

Is this a stupid question? I guess the broker is there to tell me what is good and bad but Id like to be able to look around and decide too...
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Old 07-31-2009, 10:52 AM
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Where do I start.

I'm a proponent of fee-only financial advice. I'm also a proponent of real wealth management. Managing an account is more than picking a stock. You should consider how this stock fits into your overall asset allocation, why he is recommending this particular stock, his track record for advice, etc. You can always take a look at the company on a website such as Yahoo Finance to see if they are making money, how the stock has done, etc.

If you are going to trade, do your own research. A lot goes into providing good advice, and an advisor needs to know as much as possible about your situation to be able to guide you appropriately. Just my 2 cents.
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Old 07-31-2009, 11:00 AM
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Agree with Sprockets.

The bottom line is that if you are using a "broker", then what is his role? Does he simply execute trades for you; or recommend stocks and execute trades; or is he managing some of your money? These are key distinctions.

What is his track record with you, in terms of recommendations that have proven to be winners?

It sounds like you have not researched any of his recommendations before, so either this whole thing is fairly new to you, or you have given him carte blanche in the past.

Finally, what stock did he recommend?


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Old 07-31-2009, 11:01 AM
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Originally Posted by Atticus View Post
So my stock broker (who I fish with sometimes) recommends adding a stock to my portfolio. Its not going to put me out any cash as I have some money languishing in a money market account over there.

How much research should I do on my own before I say yes or no?

What should I be looking at and where can I get the information?

I want to do a little checking around before I jump in but I don't know what makes a good stock look different from a bad stock.

Is this a stupid question? I guess the broker is there to tell me what is good and bad but Id like to be able to look around and decide too...
If this broker is more like a friend , I'd probably give him 99% credability and your own DD 1%. Anything can happen in the markets and the people who tell you to do your own reasrch are using a catchall type phrase for They don't know anything.
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Old 07-31-2009, 02:05 PM
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Did you ask him WHY he recommends the stock, and why NOW? What month has the stock made its yearly high for the past ten years, its yearly low? When does it report earnings, and what does it usually do the week before, and the week after, whether it meets or misses?
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Old 07-31-2009, 02:34 PM
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C'mon. Name the stock


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Old 07-31-2009, 02:46 PM
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Originally Posted by Snapper Head View Post
C'mon. Name the stock


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Since any stock could be a good stock or bad stock over a given period of time.. knowing the stock would probably give a better chance for giving senarios.
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Old 07-31-2009, 03:18 PM
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I picked CSCO

short term no long term yes.
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Old 07-31-2009, 03:50 PM
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The stock's symbol is: TOO
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Old 07-31-2009, 03:50 PM
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Originally Posted by glacierbaze View Post
Did you ask him WHY he recommends the stock, and why NOW? What month has the stock made its yearly high for the past ten years, its yearly low? When does it report earnings, and what does it usually do the week before, and the week after, whether it meets or misses?
This is good info. Thank you. I will ask.
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Old 07-31-2009, 04:02 PM
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Recommending retail at this juncture? Hmm.


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Old 07-31-2009, 04:10 PM
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Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it.
- Will Rogers
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Old 07-31-2009, 04:11 PM
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Originally Posted by Atticus View Post
This is good info. Thank you. I will ask.
TOO. Just fell off a small cliff. At a glance it looks like they have some delution brewing. With the swings it makes, timing a swing might work well in your favor. Reguardless it looks like there is no need to jump on it now. Without some positive news, I'm sure you'll have your chance to buy lower than todays close of 14.35
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Old 07-31-2009, 05:35 PM
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Originally Posted by Sprockets View Post

... You can always take a look at the company on a website such as Yahoo Finance to see if they are making money, how the stock has done, etc.

... A lot goes into providing good advice, ...

I lot goes into researching a specific stock BEFORE recommending it, regardless of where it does or doesn't eventually fit into a portfolio.

And a company's past history is only part of the consideration -- current product, future product, etc is also a consideration. You don't buy a stock for its past performance -- you buy it for its future performance. And to know any stock's future performance takes a lot of research and a big assed crystal ball.
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Old 07-31-2009, 08:34 PM
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TOO is an oil service company.

The price of oil strongly determines the value of service company stocks.

Ask yourself if you think the price of oil will go up or down,and for what reasons you think so. If you are to attempt to manage real money, you should have an opinion on that.

Your friend is probably recommending this stock as a means of diversifying your portfolio.
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Old 08-01-2009, 01:20 PM
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Originally Posted by Bayslayer View Post
TOO is an oil service company.

The price of oil strongly determines the value of service company stocks.

Ask yourself if you think the price of oil will go up or down,and for what reasons you think so. If you are to attempt to manage real money, you should have an opinion on that.

Your friend is probably recommending this stock as a means of diversifying your portfolio.
Sounds like a nifty way of saying ...roll the dice
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Old 08-02-2009, 07:50 PM
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Originally Posted by Bayslayer View Post
TOO is an oil service company.
Yep, I typed in the wrong symbol. They are a bit insulated when compared to other oilfield service companies, because they are on the shipping/transport side.

It is interesting that the OP's broker recommends the stock on the same day that the company announces a 6,500,500 unit public offering.


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Old 08-06-2009, 12:49 PM
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Originally Posted by Atticus View Post
The stock's symbol is: TOO
So what did you do????
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Old 08-06-2009, 03:06 PM
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One thing I noticed about TOO after taking a 2nd look is they pay .45 per share dividend per quarter. At the rate it is selling for that is 12.5% on your money.

What is Atticus getting paid for his money to sit idle? What would he get if it was in a cd or money market?

Say it is 10k. Sitting idle would pay him maybe 200.00 in a year if he's lucky. Owning TOO it would pay him 1,250.00 in a year.
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Old 08-06-2009, 04:18 PM
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The broker was probably recommending it because his employer was involved in the secondary offering of 6,500,000 common units. This was announced on 7/29 when the stock closed at 15.32/shr. The additional shares will be sold at 14.32. Be glad you didn't buy before the secondary pricing was announced. A 12.25% dividend sounds great, as long as the price and dividend payout remain stable.

Tread at your own risk when a commission-based broker suggests a specific stock.
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