Christopher Best - What You Need to Know about Problematic Market Practices

Christopher Best is very interested in finance, stocks, portfolio management and market practices.

Some individual investors choose to purchase stocks through brokers who make a living from the commissions they get from selling the stock. Such brokers will usually tell you that they have an extensive in-house research department and that their recommendations to buy come from the department. While it may sound good, in reality this model has significant flaws.

The biggest problem is a huge conflict of interest. If a broker makes money from selling you stock, they are interested in selling you as much stock as possible, not in you reaching your financial goals. In many cases, brokers do not have to disclose such conflicts of interest. You want to research the laws of your state to find out about different categories of brokers and advisors that you are dealing with. Some brokerage companies may have very impressive names, when in reality, the names mean nothing. Oftentimes such companies are not liable for the advice they provide. They also do not have to get certified or tested to provide their recommendations. This is why it is always a smart idea to know who you are dealing with, what kinds of certifications they have and what they are liable for.

Sometimes a business can hire a brokerage or an investment bank to help sell its stock. The brokerage then needs to create an aura of positivity around the company and its offerings. Many studies of brokerage companies show that their research isn’t worth anything. If you are looking for reliable research just like what Christopher Best gets while earning his degree in finance at Florida International University, find companies that just do research and do not make a commission from selling stock.
​

Christopher Best - Different Kinds of Stocks

Christopher Best is studying graduate-level finance at Florida International University. This article explains different types of stocks that finance students learn about.

                                            

Blue Chips

Blue chip stocks are the stocks from well-established, giant, most prestigious companies with stellar reputations. Many of these companies are household names. These stocks include Intel, General Electric, Visa, Wal-Mart, and McDonald’s. Many blue chip companies have been in business for over twenty-five years and have been the leader of their industries for decades. These businesses are a great investment for people looking to stay conservative in their stock picks.

Growth Stocks

Growth stocks consist of businesses that show growth potentials. Many enterprises in this category have sales, growth or market share that are growing extremely fast. Companies that fall in this category usually invest heavily in research and development. Growth stocks are riskier than blue chips, but they also come with potentially bigger rewards. These stocks perform best when stock prices are on the rise. 

Income Stocks

Just like growth stocks, income stocks do exactly what the category name suggests. They provide a stable income for investors. Income stocks come with regular payments of dividends that do not depend on the stock price. Sometimes the dividends are big enough so that the investors can completely cover their living expenses with dividend checks. Many of the stocks in this category also fall in the blue-chip category. 

Preferred Stocks

These stocks are very similar to both stocks and bonds at the same time. Usually, a preferred stock has a dividend and a redemption date. Investors get their dividends regardless of how the company performs. When a company is underperforming, preferred stock holders get paid first. When a company is doing extremely well, certain preferred shares may get more than one dividend payout. However, preferred stock owners usually do not have the same rights as common stock owners. 

 

If you want to learn more about other types of stocks, you can do so by studying multiple books on the subject just like Christopher Best of Miami did.