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Did you know this?

Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Buffet, Lynch and other legends - Investing Strategies
Forum Discription: DIscuss about the strategies followed by the great investors. Share an idea which would have impressed the masters. Try and bring their International experience into the Indian Markets.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1473
Printed Date: 07/May/2025 at 4:39am


Topic: Did you know this?
Posted By: valueman
Subject: Did you know this?
Date Posted: 20/Dec/2007 at 11:29am
Warren Buffett has estimated that the investing public pays about $130 billion a year in brokerage costs, fund management fees and other expenses. Considering that the companies in the S&P 500 generated total operating income of $137.6 billion last year, Buffett's math has an astounding implication: that we investors are turning most of our rightful share in corporate America's profits over to the intermediaries who handle our money for u .


Replies:
Posted By: basant
Date Posted: 21/Dec/2007 at 12:24pm
If you add the spread that goes into buying and actually selling shares the potential leakage is far more then it appears. Unfortunately very few understand this plain logic and once they understand this they would shift the cash flow from the brokers back to the clients. Problem is it never suits the broker to educate the client.

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Posted By: rakeshmehta48
Date Posted: 21/Dec/2007 at 1:16pm
Very well said Basant Ji. Very few investors consider Bid/Ask spread.
The effect is multiplying if one is a day trader, specially in context with Indian shares, where one has to pay service tax and STT for each transaction.


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Fund Management is Most Important

Posted By: sunlight
Date Posted: 21/Dec/2007 at 3:59pm
It simply means - Buy brokerage companies. 
 
Disclosure - I am overweight on brokerage sector.

Posted By: Vivek Sukhani
Date Posted: 22/Dec/2007 at 9:47pm
Spread charge moves from buyer to seller. It doesnt go to the broker.


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