Reply #12: I have a much better idea. At least, I think it's a better idea. [View All]

[Ian David]

I could be wrong.

I've had shitty ideas before.

Anyway, here's my idea.

Pass a law that says brokers can charge fees only for making trades on stock accounts, not for holding your investment for you, unless you have more than a certain amount of money.

The idea is for the small investor to put money in the market and avoid the situation I had.

I bought $500 worth of SpaceDev and SpaceHab stock back in 1999 through Prudential. Since then, my "service fees" have become greater than the value of the stock.

Yes, I know they were probably stupid stocks to buy. But I remembered a story The Motley Fool talked about on NPR.

He told about a Harley Davidson motorcycle guy he met at a bar. The Harley guy said his broker told him to invest his money in a couple of companies he knew nothing about, and never understood what the companies did. He got a lousy return and regretted it.

The Motley Fool guy asked him, "Why didn't you invest in Harley Davidson?" It turns out, if he'd invested the same money in Harley Davidson, he would have done great. The moral of the story is to invest in things you understand and that you like.

So, I invested in SpaceHab and SpaceDev, and told Prudential that I wasn't planning on selling the stocks for at least another 70 years. With that in mind, I somehow wasn't adequately informed about yearly service fees.

SpaceHab
http://www.sec.gov/cgi-bin/browse-edgar?company=SpaceHab&CIK=&filenum=&State=&SIC=&owner=include&action=getcompany

SpaceDev
http://www.sec.gov/cgi-bin/browse-edgar?company=SpaceDev&CIK=&filenum=&State=&SIC=&owner=include&action=getcompany

Actually, I would have done better if I'd invested in Bio-tech firms using a formula I'd come up with. I had a list of companies that had at least one money-making product and at least one other completely novel product at stage III in the pipeline and a stock price under $5/share. I'd picked three of my favorites and watched as they did fantastically, but I never invested in them. This is not advice, this is anecdote.

Anyway, my idea is to allow consumers to invest in stocks and mutual funds without service fees, except to make a transaction.

This would be completely separate from Social Security.

And there should be a tax credit for up to four transactions per year, up to a maximum of $1,000 in fees per year.

Anyway, how stupid is my idea, and is it more stupid than what I invested in?