Question: Who tells the stock brokers what stocks to sell, Is it a financial analyst who tells him?


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Answer #1:

Brokers don't place stocks unless some customer calls in and places an order through the broker. Normally most orders are placed electronically directly by the customer.

A full service broker may recommend stocks to customers but unless then customer places an order, it won't be bought or sold.

Answer #2:

Brokers will often pay for the services of financial studies to be done in particular industries. Analyist firms can specialize in particular industries such as transportation, financial banking, agriculture, energy, ect. The brokers pay a fee for the information and reports produced by the analyists. The brokers are often just the sales men getting investors to put money into the investments.

Answer #3:

There are generally two different kinds of brokers: I assume we are talking about retail brokers who deal with customers.

Of that there are full service and discount brokers.

1. Clients tell retail full service brokers what to buy or sell. These brokers can't just indiscriminately buy or sell without trading authorization.

These brokers can advise clients about what to buy and sell, but they RARELY trade in customer account, as the large retail firms don't like trading on retail accounts. I know this because I used to work at a major firm.

Brokers also rarely every pay for research as the firms they work for have their own analysts and get that information for free.

2. Discount brokers such as ETFC, Scott, SCHW, Fidelity, etc, make no decisions on any kind on client accounts, including they cannot have the authority to trade for clients. Clients make all trading decisions. By eliminate the full service broker, the client gets a lower trading commission, however the clients are completely on their own to figure out the market and their own plan.

3. Analysts may cover particular stocks or industries. They publish their opinions to the full service firm and the firm can note this to brokers. Brokers can advise clients of such information and discuss that with the client to determine if a change is necessary in their overall strategy or not.

Analysts are not always correct, and a clients longer term goals might be different than an analysts' short term outlook.





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