Sometimes The Best Thing To Do Is Nothing

I had an interesting email conversation with a reader named Bill that I wanted to share. Bill is a stock broker in Oregon and has been working with the same brokerage firm for over 10 years. As I have taken several opportunities to slag their profession I was interested to hear more about his experiences. In the back and forth chat he said something that I think epitomizes my real issue with brokers.

Bill said, “The hardest part of my job is that I am forced to make trades even when I know the best thing for the client is to do nothing.”  What Bill is identifying is the frustration he experiences when he is forced to buy stock for his clients, but doesn’t see anything in the market worthy of purchasing. This may be due to the fact that there isn’t any desirable stocks that meet his client’s risk and interest perspectives, or that there are great companies available but they are overpriced.

Bill’s comments gave me pause.  I personally haven’t cut a trade in over a month- there are great companies out there, just nothing that I am really interested in. So for me sitting in cash at the current point is far better than introducing risk by paying for a bad company, or paying too much for a good company.

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