Going for Broke With Brokers

I'll take responsibility for this. But now that I know better, I'll never listen to another broker without evaluating the suggestion for myself. Years ago, I bought Nortel Networks at my broker's recommendation around $60. He finally contacted me when it was at $6 to ask if I wanted to sell. (It recently filed for Chapter 11 bankruptcy.) About a year ago, I bought Terex for around $105 — once again, on a broker's recommendation. I ended up losing about 80 percent of my investment. More recently, I bought Citigroup at $22 — yes, on the recommendation of my broker. This is when I began to get smart. If I'd waited to hear from him to sell, I'd probably be holding it today. I did my own research and sold at $24 for a decent gain. That's when I decided I didn't need a broker anymore.

— Dave Kaczmarek, Los Angeles

The Fool Responds: Some brokers are good and will serve you well, while others are more interested in getting you to buy or sell something, which generates commissions for them.

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