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Brokerage Cold Calls, Mutual Funds vs. Money Managers and Picking Commodities Brokers

Also, why the Big Board is called the Big Board.

First up this week is N. Mcconnell, who writes: "I received an interesting call from a person claiming to be connected to a company whose stock he was touting. The stock trades on the bulletin boards at around 6. He told me that the company is going to launch some kind of blitzkrieg marketing campaign that would increase the price of their stock to around 15. He told me that if I was interested he would have someone else call me to discuss this opportunity. I told him that I was interested, but I have yet to receive a call. The company appears to be okay (not that I would ever buy the stock) but I thought the whole affair to be quite strange and thought you might have a story there somewhere." The only story, if ya don't mind, is to use your story as a way to encourage investment newcomers to slam down the phone on any broker that calls them with what sounds be a tempting, can't-miss opportunity. There's no such thing, and nobody can tell you where a stock is going to trade. And this tip: if you do get a cold call from a broker, make sure you check that broker and that broker's firm out with the National Association of Securities Dealers, either through its tollfree phone number (800-289-9999) or the NASD's Web site. Be especially leery of anybody pitching stocks that trade on the over-the-counter bulletin board or pink sheets.

Message Center

    Memo to

    Paul Schectman

    , who wonders if he can get better results with a money manager that charges 1% of assets under management, plus trading costs, versus having a balanced mutual fund manager: Common sense applies on this one: There is no blanket right or wrong answer. Depends on who is managing the money and what your goals are. Some fee-based money managers perform better than mutual funds, and vise versa; in general, neither perform as well as the market. And if the money manager is part of a brokerage firm "wrap account," you might as well shop around to make sure you're getting the best deal and/or the best manager.

    Memo to

    Oscar Handle

    , who wants to know how to go about finding brokers who deal in commodities: Oscar, you might want to try going straight to the source -- the

    Chicago Mercantile Exchange

    . The

    CME's Web site lists all of its member firms, through which all commodities futures and options orders must clear. You can link directly to these firms' Web sites from this page. CME Communications Director John Holden said that because institutional trading dominates the futures markets, you should be prepared to call around until you find a firm that handles retail accounts, or at least one that can steer you toward a retail broker. Holden recommends the CME's "How-To" kit for investors new to commodities trading (available on the Web site). Also, check out

    InvestorLinks' directory of commodities brokers.

    Memo to

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    TheStreet Recommends

    Ray Watson

    , who wonders why people call the


    the "Big Board:" Good question, Ray. To everyone who guessed the huge board that displays stock prices -- Wrong! Same to those who think the term refers to the large annunciator boards once used to page members on the trading floor. Stop thinking "thin, flat object" and start thinking "association." The New York Stock Exchange archives tell us that in 1817 the Exchange was formally organized as the New York Stock and Exchange Board. Although Exchange members voted to shorten the name in 1863 to the New York Stock Exchange, people continued to refer to the NYSE informally as "the Board," "the Old Board," and "the New York Board." Later, in this century, the Exchange's unquestioned status as the center of the financial world made it "the Big Board."

    Memo to

    Keith Simonian

    , who wants to know if there is a chart explaining how much each Dow stock affects the Dow Average: There are several sites where you can easily compare the performance of the Dow's component stocks against the index as a whole. The

    Wall Street Journal Interactive Edition's

    Databank has links to all the Dow stocks directly beneath a chart of the index's performance.


    has a similar feature that lets you look at the Dow's movement in the context of its 30 components. Of course, neither site will give you a magic formula that will let you predict


    future impact on the Dow. But you can get a graphic representation of this relationship over time at

    BigCharts, which allows stocks to be charted against other stocks or indexes. (Don't forget to factor in the stock's weighting factor, which you can look up at

    Memo to an anonymous reader, who wonders if there is any way you can know if a broker holds a large position in a stock he's recommending: Yes, there is -- just ask. John Ramsay, Vice President and Deputy General Counsel at the National Association of Securities Dealers, says that the

    Securities Exchange Act of 1934

    requires that full disclosure in a number of specific instances: if the brokerage firm makes a market in a security it is recommending to a customer; if a control relationship exists between the brokerage firm and an issuer whose securities the firm is recommending to a customer; or if the brokerage firm participates in any underwriting of a stock it is recommending to a customer. But Ramsey also points out that these regulations only apply if you have what the Securities and Exchange Commission calls "an advisory relationship" with a broker. If you have a more academic interest in a firm's interest in a stock it's touting, you're probably out of luck. There's no single regulatory source for this type of information. As Ramsey says, "the issue of potential conflicts is so large that it would be impossible to catalog all the things that might be brought into play."

    Memo: Have a question? The dumber you think it is the better. Just shoot it to Include your full name, and please, no questions seeking personal financial advice or regarding personal brokerage disputes. And this reminder: Because of the volume of mail, personal replies can't be guaranteed.

    Herb Greenberg writes daily for In keeping with the editorial policy of TSC, he does not own or short individual stocks. He also does not invest in hedge funds or any other private investment partnerships. He welcomes your feedback at Greenberg writes a monthly column for Fortune and provides daily commentary for CNBC.