Investments Sure to Blow Up

In March, our cover story was called "Murder Holes," written by financial advisor and "reformed broker" Joshua Brown. The article was adapted from Backstage Wall Street, a book due out soon (McGraw Hill). Brown, a blogger on TheReformedBroker.com, describes investments that generate good commissions but are sure to screw over your clients. The article generated lost of supportive emails from readers. Here is a notable letter to the editor.

"It only took me only a couple of months of my 25 year career to learn some valuable lessons in this area. 1) If it is easy to sell, it is a Murder Hole (1986 EF Hutton selling leverage bond funds, 1993 Piper Jaffrey selling leveraged adjustable rate funds, 1999 technology stocks, 2008 Oil stocks). Another lesson, if it pays the broker too much it is a Murder Hole. The firm will make money, the broker will make money, the client gets killed (however, 2 out of 3 isn't bad). It is a three legged stool for a reason." [Author's name witheld.]