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Taking Note of Broker Discussions

Whenever you talk to a broker about buying or selling a security, get a clean sheet of paper and take notes. Every note you make about your conversations with a broker should have the following parts:

I. The Circumstances of the Conversation

How and when did the conversation take place? Note down the following:

  • The date
  • The time
  • The broker's name
  • The name of the broker's company
  • The address of the company
  • The mode of the conversation

    Did it take place over the telephone? Was it through the internet (e.g. video conferencing - take note of the application/website used)? Was it face to face (take note of the venue of the meeting).

  • Who initiated the conversation

Did your broker call you or did you call him? Did you set the appointment or did he?

II. The Substance of the Conversation

Under this part, you should write down the specifics of your conversation about the security you discussed. It should have the following 6 sections:

1. The name of the security

What is the name of the investment product under discussion?

2. Your broker's recommendations and discussion

This will contain the following information:

  • Your broker's recommendation

    What does your broker recommend you do with the security? Does he advise you to buy or sell? How many shares does you broker say you should buy or sell?

  • The justification

    Why is your broker recommending the above action? List down the reasons your broker gives as to how the purchase (or sale) of the security meets your investment objectives.

  • The risks

    What are the risks if you proceed with the recommended action? Write down your broker's response.

3. Written materials about the security

This section will contain the following information:

  • Did you request written materials about the security?
  • The written material you asked for.

    Which particular material did you request? Was it a prospectus, the most recent annual report, the most recent current report, the most recent quarterly report, a brochure, or something else? Be sure to note it down accurately.

4. Decision

Note down your final decision. Did you decide to do nothing, to buy or to sell? If you decided to buy, how many shares did you commit to buy and how much would these shares cost? If you decided to sell, how many shares did you commit to sell and how much would you gross on the sale?

If you requested written materials, declare that you made your decision after reading the materials that your broker provided.

5. Total Cost

With the help of your broker, estimate the total cost of the transaction. The total cost of a purchase transaction includes the cost of the investment and other incidental fees. The cost of a sale includes service charges, commissions, and other fees.

6. Remarks and Other Notes

Under this section, you should write down all other notes and remarks that may turn out to be important later.

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