How To Be A Stock Broker

The Investor: Students Fail at Stock Picking, but Learn the Important Lesson

At the start of the semester I give the students one-page backgrounders from a stockbroker of about 25 New Zealand shares. I ask them to choose a share they think will perform well over the next 14 weeks. I also assign another share to each student, and put them into one of five portfolios of five shares.

The day of reckoning is the last lecture of the semester. And this year it was a rude shock for some. Air New Zealand - the second most popular share, chosen by 56 of the 350 students - came dead last. Its return over the period, including dividends, was minus 14 per cent, perhaps because of rising fuel prices.

Meanwhile, the best-performing share, NZX, which was chosen by just three students, produced an astonishing return of 55 per cent.

Other popular shares also performed badly. The favourite was Fletcher Building, whose 3 per cent performance ranked 20th of 25. And third favourite, Auckland International Airport, ranked 18th.

Small wonder that when I asked for a show of hands on whose share had performed better than the one I had assigned to them, only about a third of the class responded.

I hastened to tell the students that in other years it was closer to half, which is what you would expect if you believe – as I do – that stock picking is basically a game of luck. This year the students had unusually bad luck.

But the main point of the lesson was not about picking shares but about diversification.

When we looked at the performance of the five portfolios, they ranged from 1 per cent to 22 per cent – a much narrower range than the minus
14 to 55 per cent for the single shares. And for the “whole class portfolio” of 25 shares, the return was comfortably in the middle, at
9 per cent.

The message? The more shares you invest in, the less the total volatility, because the good offset the bad and vice versa. Sure, you miss out on the big highs. But research shows that most people are willing to do that if they also miss the big lows.

There was, though, one concern with this year’s results. I didn’t want students to go away with the idea that a three-month share investment usually brings in around 9 per cent. I had already told them that you really need ten or more years to invest in shares. But would they forget that?

Fortunately, I had to look no further than the previous year’s results to make my point.

How to be a Stock Broker | Greater Than 10%

You love the stock market — the trading, the fact-paced action, and the thrill of risk taking. But how do you become a stock broker? What steps need to be taken and what skills must be learned?

Get some schooling behind you. Whether you travel the road of online courses at elearners.com or go for the more traditional method of college learning, gaining the skills through multiple courses will place you on the road to success. Study on your own. Learn about investing. Find out how to get the information you need quickly and easily. Being a part of an investments club helps you to learn the ropes while investing as a group. To be a successful stock broker, you need to enjoy sales. You also need to be able to take criticism without allowing comments you’ve never asked for, nor appreciate, travel below your skin. Be prepared to work long hours. Expect daily competition. Do some on-the-job training. Book work can only take you so far. Start your own business investment portfolio . Take the Series 7 and Series 63 exams. The Series 7 tests you on topics such as: equity securities, debt securities, options and derivatives, retirement plans and more. The Series 63 exam tests you on state registration laws and procedures, penalties and suspension, discretionary rules and other Uniform State Law topics.

Like anything else worthy of your time, becoming a stock broker takes both work before and after you get your license. But with the right training, you’ll be on your way.

How to be your own stockbroker

Become your own stockbroker, a practical guide to trading in South Africa

Often, when an investor calls to buy or sell shares, he or she will ask for the stockbroker and not the dealer.Analysts are asked if they trade daily, ...

Boston Institute of Finance stockbroker course, series 7 and series 63 test preparation

You will find the Boston Institute of Finance Stockbroker Course a very rewarding experience. One main goal of the course is to enable a candidate to pass ...

Barron's Stockbroker Examination

Our broker might sell the stock to Broker B at $120 per share. Broker A would lend the stock to our broker for delivery to Broker B, the buyer. ...

A treatise on the law of stock-brokers and stock-exchanges

When Broker can Act by Substitute. X. Broker's Commissions. XL Communications betiveen Broker and Client not Privileged. I. Legal Relation of Stockbroker to ...