Derek Chow's Blog

“I don’t have time to learn, I’ll let the broker handle it.”

If this is in your mind, you may want to rethink that.

A recent article on YahooFinance discusses an issue that has been around throughout the history of the stock market. The issue, your benefits are not at the top of your broker’s priority list. When I read this article, it made perfect sense to me and I think brokers should not be attacked for what they do.

5 Things Your Broker Won't Tell You

Everybody wants to make money, especially brokers and financial advisors. Investors(you) are simply a tool for them to make money. Even if you lose money, your broker will have somehow profited off your loss. Some may say this is unethical and be disgusted by how the world of finance operates. But it has been like this for so many years, and in the end, money continues to flow into the hands of these “unethical” people.

A broker in midst of his diabolical laugh

In class, Murray mentioned, but disagreed with, the phrase “finance is evil”. I have to agree with him. Finance is not ‘evil’; most of the people who think it is evil are either financially illiterate or unwilling to learn the ways of finance.  Having said that, I encourage everyone to read this article as I am not able to fully explain it in this brief blog.

Source:

http://finance.yahoo.com/news/5-Things-Your-Broker-Wont-usnews-4082745709.html?x=0

What has Mr. Mark Hurd been up to in the past two months? Hurd pushed Oracle’s market value up $6.8billion in a day. In August, he dropped $10billion off Hewlett-Pakard’s market value within minutes. He also received a warm severance payment valued around $40million upon his resignation as CEO of H-P. Mr. Mark Hurd, how do you do it? Did you abide to the “social responsibilities” of a corporate executive?

Mr. Mark Hurd

No.

In fact, Hurd was forced to resigned from H-P due to minor inaccuracies in some expense reports to conceal a love affair. However, Oracle is willing to hire Hurd as co-president, despite his lack of “social responsibility”. I believe that Hurd knows that some companies will overlook certain things, if it’s worth it. It seems business ethics only matter when they put the company’s finance at risk. Hurd’s actions did not.

Hurd Hired by H-P Rival Oracle

Hurd resigned from H-P(HPQ) at the beginning of August. Oracle(ORCL) offered Hurd a job early September. How well does the graph reflect business ethics?

I do not believe that a majority of the shareholders, who have no correlation to the company, aside from their investment, would be willing to sacrifice a great return for ethical restrictions within a company.

“In a free society, it is hard for “evil” people to do “evil”, especially since one man’s good is another’s evil.”

Sources:

http://finance.yahoo.com/tech-ticker/the-real-reason-hp-fired-mark-hurd-%28as-best-we-can-tell-…-%29-535311.html?tickers=HPQ,ORCL,QQQQ,^DJI,^IXIC,IYW,XLK

http://online.wsj.com/article/SB10001424052748704358904575477870066918884.html?KEYWORDS=hurd

http://blogs.wsj.com/deals/2010/09/07/is-mark-hurd-worth-68-billion/?KEYWORDS=hurd

http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html