Lessons from Bureaucrats in Collaborative Stock Value (Part 2)

You can estimate the wastage of resources when you hold stocks of two members of the same industrial sector. Does the cabin service really differ between competing airlines, and would it not be better if you could just have safe and restful flights on safe aircraft for less? What about competing hotel chains? Does the competition matter once you have washed, eaten, and fallen asleep? Discussions about brands of automobiles are even funnier since most of them simply assemble components from the same suppliers-unless of course it is your capital which is sunk in to their stagnant stocks!

The Investor Club Approach to Top Stock Picks

Let us not row too far in to the murky water of corporate competition, and survey instead, the wide banks of links with fellow investors. Stock trading involves a person who thinks that a stock is undervalued, buying from someone else who thinks that the same security is over-priced: well, they can’t usually both be right! The Internal Revenue Service (IRS) has special provisions for investor clubs, particularly when they are structured as trusts. Most stock brokers are selfish when it comes to stock trading, and are happy to collect their fees even when they know that transactions will not be to your advantage. You can break this vicious cycle of stock market losses by aligning closely with fellow investors, and by converting competition in to collaboration.

Are you a member of an investor club, or would you like to form one? Have you benefited from a merger between former business rivals? Do you worry about mounting operating expenses in companies for which you own stocks, on excuses of competition? Join our forum and post your views and experiences. We wait to hear from you!