Peter Grandich wrote Confessions of a Wall Street Whiz Kid in 2011 to talk about his journey from humble beginnings to riches and from material wealth to spiritual wealth. In his book, the telling parts for investors is at the beginning and lessons learned. When Mr. Grandich started his career in 1984, he started in what were called penny stockbrokers – they specialize in stocks trading at less than $5.00. The problem for investors is for the stocks that are touted, the stockbroker is the market. It is very easy for investors to buy (the inventory) but difficult to sell (the brokers would have to buy the inventory back). The stocks will rise because the company is selling their inventory and once acceptable levels of shares have been sold, the company moves to the next “hot” stock and the old one drops back to pennies a share. It is very rare for any of the companies to actually have a significant breakthrough and actually make money, although it has happened. When that happens the larger stock brokerage companies start acting like penny stockbrokers.

Every stockbroker makes money on the IPO market or initial public offering. When the IPO is active, there are many companies issuing stock, one method to gage whether they will be successful is by the spread of the food that was put out at the meeting. The better the spread, the worse the success. Companies working for all the shareholders spend less on all the countless meetings. If you are going to be active in IPO markets, you have to have to buy and sell options.

Linking to dividend producing stocks, all the above can make you lots of money, it can also lose you lots of money. If you stick with dividend paying stocks, the losing will be much lower. Often you will miss the highs and lows, but a steady stream of income or dividends offsets the roller coaster ride. Stock brokers are an important part of the process, just understand how they work and make money and more important how you make money. Understanding a dividend producing stock is relative easy.

There are more questions than answers, till the next time – to raising questions