How to claw back returns
Monday 16 August 2004
If there is one thing that haunts stockbrokers' dreams above all else, even more perhaps than an insider trading investigation, it is a prolonged bear market where share prices fall month after month after month.
By The LandlordSuch an environment is depressing not only for the psyche but for the general process of intermediating financial markets.
For one thing, stockbrokers and financial planners are perennially optimistic.
People who sell equities are generally remunerated in three ways: from a fee on the sale of some sort of equity-based security, promoting share floats or an ongoing fee to manage a portfolio.
A bear market makes the execution of any one of these processes much more difficult. Mum and Dad, after hearing the news that stock prices have fallen, decide to leave the money safely in the bank.
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