Stock market investing guide

According to the U.S. Department of Labor, approximately 320,000 brokers and traders are currently employed as securities, commodities, and financial services sales agents. Of those agents working solely in securities trading, around 143,000 work exclusively for brokerages and exchanges while nearly 57,000 are self-employed independent agents. Nearly 264,000 agents work with wage and salary compensation while the remaining agents receive only commission incentives. A total of 829,700 people are employed as security and commodity brokers or as service personnel.

Stock Market Investing for fun and profit

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Stock Trading: A Comprehensive Industry Analysis and Overview

While programs ensuring advice on picking stocks and other financial investments are plentiful, no program bears any formal, real legitimacy. In the past, publications such as the Wall Street journal have derided such programs, in addition to real investors, by placing so-called stock market "experts" against a dart-board full of stock ticker symbols. Eventually, the stocks chosen by darts outstripped the profitability of those placed by Wall Street experts.

Stock Market A Game of Chance

As a result, the stock market is essentially a game of chance with gains and losses incurred by all parties at some point. Nevertheless, marketing stock trading products requires an emphasis on security. Potential customers for brokerage services are often suspicious of the broker's intentions, whether it is through high fees or misplacing their finances.

By proxy, many brokerage customers feel secure in their investment strategies as a result of feeling secure with their broker. Even customers who choose short-term, volatile investment strategies will report higher confidence levels in professional brokers compared to day trading or their own stock expertise. While this is a red herring due to the nature of the market itself, it is nonetheless exploited to the benefit of brokerages, firms, and banks throughout their marketing campaigns.

PC-Based Investing Tools

Offline, PC-based software-based tools and analyzers are slowly declining in their popularity due to the growing trend of web-based applications throughout the Internet. Advertising-based revenue typically supports these software applications, allowing software-based financial applications to be rendered to users at free or low-cost price points. Often, online brokerages or financial information sites, such as MorningStar or Yahoo! Finance, will allow basic information to be parlayed for free while more sophisticated tools are available at-cost.

Web-Site Based Investment Tools

Financial information sites, such as the aforementioned MorningStar and Yahoo! Finance, provide a bevy of information regarding financial investments, ranging from stock quotes to mutual fund grades and more. In most cases, the "portfolio" of investments a given user possesses can be tracked dynamically using these sites and saved for later use. Manipulation of the portfolio is typically not allowed through information sites unless it is a sister property of an online brokerage.

Small banks and national bank chains are progressively taking advantage of financial investment opportunities online. Many major national bank chains, ranging from Wells Fargo to Washington Mutual, have created easy-to-use stock trading applications that bear much smaller commission fees than online brokerages on a per-trade investment. Typically, these applications require regular investment on the part of the bank customer in order to offset the lower brokerage fees.

Online Investment Options

Online banking investment applications are made to supplant typical savings accounts and certificates of deposit as regular savings vehicles. Often, they tie directly into online banking interfaces customers use on a daily basis for handling checking and savings accounts. They take advantage of customer curiosities in the way of day trading while becoming a boon for bank profits.
Because the market can result in investment returns beyond the meager percentages afforded by even the most generous savings accounts, customers are tempted to make regular trades on a monthly basis. Lower commission fees also offer additional incentive for customers to turn to these investment programs. Once an automatic investment is setup, customers are less likely to relinquish their regular investment or participate in active trading.

Banks are most often the beneficiary of these programs due to the increased profitability of market trades compared to savings accounts and CDs with less than $10,000 of invested funds. Because of the regular interval of investment, customers are less likely to move large amounts of funds on a per-trade basis. Therefore, commissions present a regular source of profitable income for banks without requiring guaranteed returns from bank coffers as seen with interest-bearing accounts.

Prospective customers for such programs are unlikely to remain long-term investors or to invest sufficient funds warranting the monthly commission fees. They sometimes do not reap sufficient benefit to justify such investment. In many cases, the customer loses funds.

Retirement Investment Overview

Retirement savings through Roth Individual Retirement Accounts (IRA), 401(k)'s, and pension funds make up the largest pool of funds typically handled by investment professionals. Because they are created for long-term benefit, fundamental analysis and an emphasis on diversified investment, these points are key selling targets for investment professionals seeking to find and retain retirement fund accounts. Company-wide retirement fund accounts are some of the most lucrative opportunities available for financial managers.
During bull market periods, retirement accounts with investment options that include day trading opportunities become popular. For this reason, large corporate banks and nationwide chains offer these services to companies seeking centralized management. The ability for individual customers to manage their accounts results in fewer commission opportunities for these chains. However, the additional services provided offset this financial loss through the creation and retention of new accounts.

Investment Opportunities

More obscure niches for investment opportunities can include Health Savings Accounts (HSA) and company-issued stock options. Companywide HSA plans are slowly gaining ground as lucrative alternatives to traditional health plans. Brokers and investment professionals can retain these accounts across the spectrum of entire companies, making them lucrative opportunities for large sums of commission fees.

However, because HSAs are designated for use in health care in the short-term, accountholders are less likely to participate in regular trades due to apprehension and the potential for financial loss. In addition, employers have an incentive to limit or outright restrict investment options for these accounts in order prevent employee recklessness and the loss of employer contributions to the fund. For this reason, HSA holders typically allocate most of their investment into interest-bearing accounts that do not generate commission revenue.

Company stock options increase client pools and exposure to a broker or bank's brand and are therefore lucrative. Commission generation opportunities are limited by the exclusivity to the company's stock. Commission can only be collected upon the buying or selling of stocks. Buy commissions are generally negotiated at a bulk rate with the company in question.

Stock is often not sold unless an employee wishes to supplement income. In addition, only select employees are usually provided with stock option incentives, and companies with the size and financial ability to offer these options is limited in comparison with small to medium-sized businesses with retirement accounts that enable investment. Therefore, the availability of such clients is often limited for smaller brokerage firms and individual professionals.

Youth investment amongst the 18-35 year age group in retirement savings is fast becoming a major source of commission income for major brokerage houses. Fears of a looming social security crisis and the widespread availability of tax-deferred retirement accounts have created a sizable investment culture for youth investment. Potential investors within this age group are most likely to be married, college graduates, and retaining a level of income in excess of $60,000.

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