Brokerage Houses

The intelligent investor will not do his buying and selling solely on the basis of recommendations received from a financial service. Once this point is established, the role of the financial service then becomes the useful one of supplying information and offering suggestions.

Advice from Brokerage Houses

Probably the largest volume of information and advice to the security owning public comes from stockbrokers. These are members of the New York Stock Exchange, and of other exchanges, who execute buying and selling orders for a standard commission.

Practically all the houses that deal with the public maintain a “statistical” or analytical department, which answers inquiries and makes recommendations. A great deal of analytical literature, some of it elaborate and expensive, is distributed gratis to the firms’ customers-more impressively referred to as clients.

A great deal is at stake in the innocent appearing question whether “customers” or “clients” is the more appropriate name. A business has customers; a professional person or organization has The Investor and His Advisers 261clients. The Wall Street brokerage fraternity has probably the highest ethical standards of any business, but it is still feeling its way toward the standards and standing of a true profession.* In the past Wall Street has thrived mainly on speculation, and stock market speculators as a class were almost certain to lose money. Hence it has been logically impossible for brokerage houses to operate on a thoroughly professional basis. To do that would have required them to direct their efforts toward reducing rather than increasing their business.