Brother-in-law’s advice relatively lacking in common sense
.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;}
Dear Mr. Berko:
I’ve had the same broker for more than 15 years, and it’s one of the biggest in the industry. Late last year. I was watching Wachovia Corp. stock when I noticed that this once well-regarded bank was trading at 75 cents a share. So I called my broker and told him that I wanted to buy 3,000 shares, which would have cost $2,250 plus a $225 commission. Well, he said he would have to call me back because there were some questions about the stock and he needed to clear them up before he put my order in for execution. He called back in 20 minutes and said that his New York office would not permit the purchase of a stock trading under (I think he said) $3 per share. This didn’t make sense to me, but I just forgot about it. A week later, Wachovia rose to $8 or $9 a share, and I could have made about $20,000 after commissions. I was recently discussing this with my brother-in-law, who is a divorce attorney. He recommends that I meet with one of the partners in their law firm. My brother-in-law thinks the broker was wrong and believes I could get all of my potential profit if I sued the brokerage. Could I have your opinion on this?
My second question concerns Mexico. My wife and I are considering buying property in Mexico and retiring there when I stop working (I’m 66) next year. We know two couples living in an expatriate community in Cuernavaca, Mexico. They live like kings on $30,000 a year, which is what my wife and I would get just from Social Security when we retire. Our other income from our 401(k) plans would bring in an extra $20,000, and we could also live like kings in Mexico. Please tell me what you think about this idea. My brother-in-law thinks it’s a great idea.
G.C.: Portland, Ore.
Dear G.C.:
I’m trying very hard to be nice. But I must say your brother-in-law is dumber than a dodo, and if you stand close to him, you can probably hear the ocean roar. There are two theories about dealing with a dumb brother-in-law and neither of them works.
Your broker has the right to refuse to purchase a stock selling below $1, $2 or $3. I don’t agree with its refusal to purchase 3,000 shares of Wachovia at 80 cents, but I think a limp-wristed pansy in your broker’s New York office gets his jollies saying, “No.” However, had you gone to another brokerage like Oppenheimer or Smith Barney, you might have been able to buy 3,000 shares of Wachovia.
So I asked a judge — I happen to have one as a son-in-law — who told me that a brokerage can under various circumstances refuse to accept your business. However, once the refusal becomes known, you have an obligation to try to purchase the shares from another broker. Tell your brother-in-law to stick a chopstick in his ear, because you’d be wasting your time and money pursuing this.
Meanwhile, the $225 commission your broker would have charged for that purchase is turnpike thievery. Charles Schwab would have executed that order for you for a commission of $8. I can’t imagine why so many people still use brokerages like Merrill Lynchem or Smith Baloney, etc., and willingly pay such humongous brokerage fees.
Cuernavaca, Mexico, is a charming colonial city less than a day’s drive from teeming, crime-infested Mexico City. Cuernavaca’s architecture, beautiful gardens and enchanting attractions are hidden behind the tall walls of beautiful homes and estates that protect some of the most remarkably preserved landscapes of colonial life. The city boasts an idyllic expatriate community where you can certainly live like a potentate on $40,000 or $50,000 a year.
However, I’d sooner clean sewers than spend my retirement years in Mexico. Frequent kidnappings, daily beheadings, killing of judges and government officials, indiscriminate murders of citizens and rampant lawlessness now define Mexico. Former CIA chief Michael Hayden ranks Mexico as one of the most dangerous countries in the world for U.S. citizens. And the U.S. Department of Defense Joint Forces Command believes Mexico is at “risk of a rapid and sudden collapse” caused by criminal gangs and drug cartels. I’ve been to Cuernavaca several times more than a dozen years ago, but today I think I’d be more comfortable in Afghanistan. Somehow, I get the feeling that your brother-in-law doesn’t like you. His advice isn’t worth a tuppence.
Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@comcast.net. © 2009 Creators Syndicate Inc.
Trending News
