Do You Need To Mail Certificates To E-trade Before Selling?
Q: I have seen better total cost structures for real securities business although I am not at liberty to disclose from whom since that would potentially involve confidential personal information. Obviously the "apparent" cost structures of pure online bucket shops are lower than what I'm paying, but the cost difference is something for which I am in fact getting what I'm paying for.
A:
There are two kinds of answers to that, so you get both. "Traditional"
used to mean that the customer buys whatever the salesman tells him to
buy, sells only when the salesman tells him to sell (if ever), and in
more recent years has meant flat out BUCKET SHOP in which the customer
never gets the securities he paid for. Strictly speaking,
one of those in the entire 41 years (less a few days) that I've been
trading stocks, although in the early days I did buy a lot of crap under
the counter issues because the salesman said so. The results of that are
part of the reason for my rule not to trade under the counter stocks.
The other meaning of "traditional" is as in "not on the web". Yup,
absolutely. There is no conceivable way I would place an order for a
capital transaction via a media as insecure as the whirled wide wubb.
So how exactly do you buy stocks then? Over the phone...doesn't seem too
efficient if you trade a lot, or do you have a "direct" computer connection to
a broker, etc...?
Hey, if your system works and you're making a bundle, that's great, but
mailing paper certificates back and forth seems cumbersome and I can't see how
anyone who trades more than once a week can do it that way.
On a related topic: Do you own any U.S. treasuries, or own any bank CDs? Both are
considered "safe" investments...and yet both of those things are stored only in
a computer somewhere as book entries. Or do you avoid those totally?...and of
course don't keep any cash since its backed by nothing, keep gold instead :-)
If you're really concerned about online trading because of hackers, etc, then
consider having a separate computer used only for trading and nothing else, and
I mean nothing else. That protects you on your side. In regards to the broker,
there are numerous records maintained of every trade; especially once settled.
Perhaps there truly are risks, but can you point out any real world examples
of bad things that happened to people trading on-line without having the
certificates?
The only bad thing that I'm aware of happening with on-line brokers are
instances where people bought or sold stock at "market" and then got
hosed...but that's really the users fault, not the on-line brokerage; these
days many recommend or even force "limit" orders for some types of trades.