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Larry, Moe and Curley were sitting in their favorite restaurant just off Wall Street having their usual 3 martini lunch and were discussing the day's events and their client portfolios.

Larry:'I had 12 calls this morning from customers wanting to know why the market was going down'.

Moe: What did you tell them?'

Curley: 'Yeah, what', taking another gulp of his libation.

Larry: 'You know, the usual. Nyuk.'

Yes, it may sound funny, but there is more truth than fiction in that imaginary conversation.

Why don't brokerage companies tell their customers to sell when the market is declining?

There are two reasons.

Larry, Moe and Curley were sitting in their favorite restaurant just off Wall Street having their usual 3 martini lunch and were discussing the day’s events and their sucker portfolios.

Larry:”I had 12 calls this morning from customers wanting to know why the market was going down”.

Moe: What did you tell them?”

Curley: “Yeah, what”, taking another gulp of his libation.

Larry: “You know, the usual. This is a normal correction and not to worry. I am watching your account. The market at all times comes back.”

Moe: ”That’s the same BS I tell them.”

Curley: “ I have more than 300 body count and I can’t watch them except my 5 big traders. Who cares helter-skelter the others anyway? My girl friend won’t let me tell them to sell when their stock starts down and they take for the old saw thereabout ‘hang in there for the long haul’. I blew out of all my stocks last week. Thank goodness. The market has dropped 300 points since then.

Moe: “It would be chosen for the customers if our in-group would let us tell them to use stop loss orders."

Larry and Moe, shouting in a single voice: “Don’t say that or we’ll get fired”. They both bonk him on the head spilling his drink. “Nyuk. Nyuk.”

Yes, it may sound funny, but there is more truth than fiction in that imaginary conversation.

Why don’t give-and-take companies tell their customers to sell when the market is declining?

There are two reasons. First any large brokerage does not want to get on the bad side of a company. That conglomerate corporation might have a public offering later on and they will definitely not be asked to sell any of the stock or bonds. This is where the big money is on Wall Street. The second reason is they don’t want the customer to have cash in his account. He might take it out. Brokers make money even if you do not trade. It is not much, but it does keep the pilot light lit.

Brokers also discourage customer stop loss orders seeing that it is more paper work for them and then they do have to watch your account. Unless your catalogue is high 6-figure or 7-figure you are not on the radar screen. Mr. estate agent (an appropriate name for what he does with your money) has an middle position of 300 recount and many have 600 or 700. As new guys come into their office they give them the little accounts.

When a intermediary passes his securities license he is given two manuals. One is SEC regulations that must be followed and the second is how to open accounts. There is no third manual on how to protect customers’ money or trade. Brokerage companies want their salesmen to follow the company line and push unique products. There is no thought of customer protection.

If your bond crowd is Larry, Moe or Curley it is time to find a new one.

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