benhacker

I think this topic is strangely controversial. The issue seems to stem from expectations. Namely: When a large fund investor sees offers at several exchanges at a given price, they believe that amount (across all exchanges) is "liquidity" for them. This belief seems patently wrong, as if they forget we don't have "one exchange". Reading the Lewis piece I was honestly confused at how big traders could be confused by this... The mere fact of having multiple venues for trading means there WILL be arbitrage between venues. Why else would they exist unless pricing, execution, fees, etc are differing between them. It seems like for much of the last decade, managers of many large mutual funds have been thinking the bid / ask liquidity was equal to the sum of all bid / ask NBBO pricing at ALL EXCHANGES. When it was really only the sum of the bid / ask liquidity at the largest single exchange (and that was only true if that exchange was direct routed the order...). If I see someone trade LUKOY in US at $X, and at the same time the bid in UK for the underlying hasn't moved to $X adjusted for forex, am I an evil HFT if I take advantage? If someone is buying IRE in the US and not buying BKIR in UK and a price discrepancy happens, shouldn't there be players that arb the exchanges to make prices efficient? If not, should I be able to do it? If you want to place an order to buy 100,000 shares of C @ $40.00, and you see 100,000 on "offer" but across 7 exchanges, and you only fill 30,000 at $40.00 and the rest of $40.02 (or $40.10, or $40.25). Should you be surprised by this? I'm honestly amazed that anyone who has traded in markets for more than 5 years should be. The issue of FRAGMENTATION OF EXCHANGES is an issue I think should be discussed by the SEC. The nature and special treatment or market makers should also be clarified and justified. But the issues raised in the Lewis piece about HFT being bad seem strange. There are many areas where "HFT" generally probably should be banned (quote jamming / infrastructure attacks, if there really is front running (I don't know), etc) - but unless I missed it, they weren't discussed (and may not be right to capture under the heading "HFT", I don't know). I think if this discussion raised the debate so that the regulatory environment of the exchanges becomes more rational, that would be good... I have no idea why so many stock exchanges exist in the US and ZERO bond exchanges for example. Demonizing HFT seems too easy, but I think Lewis (from what I've seen so far) let his narrative make more out of the story here than even he would normally do. Writster, thanks for (what appears to me) bringing rational points into the discussion. Something about "really fast" and "mysterious" makes HFT sound so bad. If you just call them a market maker it wouldn't make the headlines. Ben

I'm picturing the conclusion drawn the from the Aleph post - hundreds of heads nodding in agreement; 99% of whom have never looked at a NAIC filing. :) I do wish personally that BRK insurance filings showed this detail like Fairfax's. But at the end, this article seems like a way for a blogger to look smart as opposed to say something insightful... it would only come from someone who wants to know Buffett's investing secrets, an investor in Berkshire would not need (or even usually want) this level of detail. My 2 cents at least. Ben

Zarley, Thank you for the (very) kind words. I'm glad I've been more signal than noise over the years from your point of view! Made me smile! Regarding my choice, I'll repeat what others have said about it not (always) being a financially motivated decision. I am skeptical of how my returns will change with more time, but I have *zero* doubt that my (conservatively estimated) financial situation will be negatively impacted by leaving my day job (to be fair, I'm a reasonably high income engineer / manager so I am giving up much more than most I think in similar circumstances). I am actively choosing to reduce my future net worth through this decision, but I view what I'm receiving in return as much more valuable. Certainly if my investment business explodes (in a positive way!) and I'm a super star in the future, I could be very wealthy, but I'll be passing up six figure+ money for years before that happens... the opportunity cost is large. I'm truly just doing it because I have always wanted to own my destiny and do whatever I want every day. I have not thought a lot about what others will think or ask about when I tell them what I do every day. I've always found it pretty easy to explain what I do (I just tell people I read / research a lot basically), and most people who even casually know me are aware of both my passion for research and my high levels of thrift so the idea of me retiring for most of my acquaintances is already something they expect. Regardless, I'm comfortable being different, and I think most folks I will meet in the future can appreciate people who take a different path. But if not, that is ok. My wife will explain it to them in plainer English than I can. :) Regarding this thread being a sign of the top.... +1, this an many threads have me a little contemplatively lately. I take no offense if my leaving is another sign... last year was a shitty relative year for me anyway so I feel contrarian already. I also started my business originally in late '06... so basically, I am the contrary indicator... beware! :) Ben - still excited!

I've posted about this ROE comparison vs. margins before. I agree it's more meaningful than margins generally. But the question I have is in a world of 3% long rates is a 12-14% corporate ROE really reasonable? I think it's not regardless of historical 'average'. Separately, I think the "B (Equity or Book)" for US companies is overstated "versus history" (I think it's more accurate than historical) due to goodwill accounting (and perhaps it's understated a bit due to R&D accounting)... which means ROE is too high because of the rate environment and also apples to apples it's too high vs history. I personally think the aggregate market is obviously too high... but especially smaller companies (S&P100 companies seem high-ish to me, but maybe not crazy). Looking through the top 50 Russell 2k companies is funny, sad, and instructive at the same time. Of the top 25, 5 have negative GAAP earnings, and 7 trade above 50x GAAP. I would bet that 10 year forward returns for the Russell will be 1-2% annualized nominal. Just my 2 cents. Of course buying cheap stocks is still the thing to do as always. Ben My non-taxable accounts (no shorting possible) are still 90-95% long... just think it's interesting to see the contortions (not referencing this thread) that many are going through to defend an obviously overvaluled market. low rates for a generation, non-GAAP forward earnings, ignoring negative earning companies (without realizing it), etc etc etc. Crazy...

This thread is pretty timely. On Friday I just put in my notice to work that I would be leaving the company. My personal targets were always to leave once I got to ~$5M in AUM (reached last year, around $6.5M now, but some of that is mine). I basically figure(d) if I could make $40-50k off of the RIA business, then I could live modestly and my portfolio would be untouched and it could grow for the future without fear of withdrawal rates, etc. Of course in general I expect the business to grow in time at a good clip but that is all upside. Some Thoughts: 1) I do worry if additional work doesn't help returns - I think it will, but I am putting some things in place to firewall "activity" and make sure my incremental time is spent reading. 2) My goals are not to do this because it's entrepreneurial at all... I like the challenge, I enjoy the fact that it is mine, no one else is responsible for my record. I also most enjoy the freedom of time / location that it affords me. 3) I believe I have a decent # of potential clients who have hesitated to sign up with someone who is "part time" over the years, so I think a few new clients may be in the making (in addition to folks at my work who weren't aware of what I do, and now will be). Just a few thoughts for me. We'll see in a year of actually doing this exclusively what additional lessons or insights I will have. Ben

http://finance.yahoo.com/news/exclusive-pimcos-gross-declares-el-015522722.html If people aren't selling now, I don't know what they are thinking... 1) Low yield, long bull market in bonds -- Check 2) Manager who is up in years, and potentially going paranoid (if the Reuters attribution(s) are to be believed) -- Check 3) Corporate structure seemingly under turmoil (note that El Erian left once already, then came back, then left again... someone thinks his balance is needed on the organization it seems) -- Check 4) PIMCO Total Return too big to monitor ($250B +) -- Check 5) Business owners (Allianz) that has no incentive to step in until it's too late given the star power -- Check What could go wrong? You have a quarter Trillion dollar hedge fund run by someone most believe is infallible, and the owners generally don't have the capability or inclination to do any due diligence at all... seems great to me. Ben

I'll second value trap here. I think a lot of mistake from shorting come from the opposing lens of value investing. Position sizes, valuation probabilities are very very much different (and also critical) in shorting vs. going long only. You simply just can't wait stuff out the same way. It doesn't work. I think caution is always in order when it comes to shorting. ValueTrap, I'd be curious to hear your example that leads you to this thought. To me he seems exceptional in almost all ways (I'm no Greenlight expert, but other than his huge position in NEW which I suspect may have had other intentions, I don't really see him as at all lacking in risk management.) Ackman on the other hand seems pretty bad at risk management (I can't believe he didn't lose all his clients for that HLF short at the size he put it on. Crazy and stupid.)

+1, well said.

BS in EE, Minor in Business. 10 years as EE in communications / networking products. Started my RIA business a little over 6 years ago. Given that I've always seen basically 80%+ in either engr or finance backgrounds (this is true of other investment boards i've been on over many years too), I have always wondered if engineering minds are more attracted to investing because of their brains (problem solving, good with numbers, etc) or the mere fact that for most people investing isn't as interesting because they don't make a ton of money (the assumption being that engineers are well paid)? I think it's a combination of the former, with the filter of engineering people being more comfortable with forums / computers / message boards in general, but I'd be curious to hear others' thoughts. I went into engineering not because so much it was what I wanted to do, but mostly because my family kind of turned me away from my business / finance passion and it took me a while to find my way, so I'm not sure I'm a typical engineer on this board (if there is such a thing as typical). Side note, this is always why tech threads suck the most on investing boards, because half the folks talking don't have any humility because they are literally already experts (or think they are) in the topic at hand. When everything thinks they are right, a discussion board is more like a urinal. Just some idle musings... Ben

Hellsten: I believe the intent with which you are saying this is wrong. PE ratios are useful for valuation for sure, but what does that have to do with economy wide GDP growth? My point is that stock returns are correlated not with growth at the economy level, they are correlated with prices paid above replacement value. While replacement value is a fuzzy term, what it means in reality is that unless a firm has a strong economic moat (which means it has a higher than stated book for replacement value, IMO), the growth at the econ level will not flow through to (excess) profits at the firm level (on a per share basis) that create a better than average ROE. Basically, if the US grows at 2% (and everyone expects that to be the case) and fair value is a PE of 15x, but some other market (with the same laws and investor protections) grows at 8% (and everyone expects that to be the case) it also has a fair value PE of 15x. The Lynch quote is stating (I think) the differential risk on a PE basis between US and Emerging stocks (20% premium for US stocks, presumably due to risk, forex, corruption, etc which seems reasonable to me). Growth is very alluring, but sadly, unless a firm has a way to keep out new entrants, growth also brings (more than) it's share of competition, or it will have to raise equity capital to take advantage of the increasing market (your per share returns will be diluted). Studies have been done repeated in many markets that show no correlation from GDP growth and per share investor returns (it's actually slightly negatively correlated, I believe because higher valuations are often paid, erroneously, for high growth economies). This *feels* wrong, but it's logical. There will always be companies with moats and high operating leverage that can break the mold, but they are rare, and on the aggregate it is not the case. The additional upside of economic growth is counteracted by the additional downside of competition. You value stocks in emerging markets just like stocks in the US... but don't think that profit growth will be higher because of better GDP growth (again in the general case). That is only a benefit if the GDP ends up being better than the markets and competitors are expecting. Ben Side note -- Growth deviations from expectations have huge impacts on stocks (recessions, etc)... but this is not the same as what I'm saying above.

I assume the GSE preferreds are driving the return. up >10% today.

Hellsten, the problem with that quote is that returns on equities in a country in aggregate are not correlated to GDP growth over long periods of time. Which is clear by looking at the dismal return of equities in China vs their great GDP growth. More competition for that growth has cancelled out the benefits. I do think many emerging markets are cheap though, but I don't think high GDP growth is in any way part of the story... it's about expectations and valuations. Ben

Watchword, Thanks for sharing your thoughts here. I appreciate hearing the educated bull case for BTC.

Come on Sanj, So you know of a swap / short product that can provide me with way to make big returns during market downturns, over over time can still deliver me a money market like average performance? Really? I'm intrigued. LOL... Let's not let our "love" for Chanos get in the way of the obvious fact that a short-only fund (understand that maybe Chanos isn't 100% short only) should be benchmarked like this: negative [market return] + short term cash return - cost to borrow index. Over Chanos' tenure, his "benchmark" is probably -8-10% annual. Now we can all say that this is not a benchmark we would ever invest in, and indeed, most people don't short for the sake of shorting, but they short to take the extra cash / liquidity offered so they can then invest more aggressively. Let's seperate benchmarks from those who choose to invest in them... Chanos has exceeded his benchmark while investing within its rules far more than most of us here could likely do.... Just as thePupil said. Now I agree, there is a real issue with counting on shorting to reduce your volatility in a way that is reliable (and yes, reduced volatility is obviously important for anyone taking withdrawals...)... Chanos' returns have not really been 1:1 inversely correlated to the market which creates a problem when you are actually seriously thinking about using shorting to gain more than 100% exposure to something else or otherwise leveraging risks assets... sometimes both sides of a pair trade can go wrong (ask Fairfax) and even if that only happens rarely, it is a real issue for how we define risk if and when it does happen... Ben PS - I'm getting too old... I think this is the second time in 5-6 years I've posted basically this same post on this same forum... ;-)

Eric, To be clear, I should clarify that I didn't listen to the interview that started the thread. My comment about JME was just from a historical context of his focus on not losing - I think him and Klarman are good examples of those who identify 9 recessions for every 3 that happen. Not necessarily the path to riches as you note, but I find it helpful to listen to make sure I'm not missing anything. I would tend to agree with your eye rolling based on what you said above. Fenris, Thanks for the data from BBG. S&P's site spreadsheet stops showing EPS through Q2 '13 at this time, so appreciate you showing the latest.

Eric, Not to say that the market is crazy expensive, but I think it's probably more appropriate to talk about GAAP earnings when we talk about aggregate PE ratios, and compare them to history. There is a nasty trend that has developed in the past 30 years or so where the operating earnings quoted from S&P have been 15-20% higher than GAAP earnings on a pretty much continual basis. So when someone says a 15-16x PE is fair or average or whatever for the market, this historically was a GAAP PE (TTM, not forward). If you want to quote forward earnings that's fine, if you want to quote non-GAAP / non-one-time charge earnings, that's also totally fine, but if you want to quote both together I personally think that 16x sounds pretty high to me. That's probably the equivalent of 20x TTM GAAP PE for most years. Seems that ROE for corporate America is high-ish given the low rate / cost of capital environment. I could see a lot of factors that could keep stocks doing well near term, but bargains do seem challenging to find. I do agree with Oddball though, it doesn't seem that people are crazed about stocks or anything. Most amateur investors I know are mostly fully invested in stocks, but nervous as they just don't have other good options from their perception. I think stock returns will be low from current prices, but so will the returns of most other assets. The killer for stocks will only come if the normal ROE of corporate America starts to come under pressure due to interest rate gravity / competition... but not sure I see that today. Plenty of people with great records are cautious though... JME and Klarman are two to listen to if you don't like losing money... Ben

I think you are mixing up Ed Thorp and Claude Shannon. Ed Thorp was princeton-newports architect, and was not a buy and hold investor (His success was achieved with lots of convert arbitrage and other long / short strategies... and he is generally credited for unlocking the value of the B-S option pricing formula and exploiting it before it was ever published). Shannon was a more long term hold investor who did well, but I do not believe he was directly involved in anything related to Princeton Newport although he was an associate of Thorp and may have been an investor in the LP. Feel free to correct...

25-30 on average spending time on investing (message boards, K's, Q's, books, etc). Some weeks more, some weeks less.

What do you plan to use the computer for? That's pretty critical. Do you care about OS / applications (is MAC OS ok, iOS, Windows... ???) Ben

I'm not a lawyer, and I don't hire one either, so take this for what it is. In layman's terms, I believe Funds in general have rules on putting themselves out as advisors because they are essentially selling private placements in companies (and LP for example). Private placements have restrictions for obvious reasons. Separate account guys (assuming they are registered with their State or the SEC) are registered advisors, and can present themselves as such. there are restrictions are "marketing" but that does not (from what I understand) prevent you from fully disclosing facts about your business / advisory services as long as certain disclosures are met. The State has never told me there is any issue with publishing performance results. For this reason, I tend to be highly skeptical of any RIA who doesn't. I believe there is no reason why I couldn't open an LP in conjunction with my SMAs as long as I disclose it... but for the LP, I believe it would be problematic in the base case to disclose *any* performance details about the LP. So take this for what it is. I'm not a lawyery type who reads all the regs in detail, I know there are some who have found interesting ways to get around some of these general guidelines, and I do know some people who have found a way around typical rules for LP / fund limitations (even ignoring the performance marketing aspects) such as # of clients, wealth of clients, registration, etc. Basically what I'm saying is that after extensive research on these topics over the years and talking to many others in the field, I think there is a lot of grey area and nuance. My basic answers for RIA / aspiring RIAs (in the US) -- Call your state regulator and ask what is needed. They are at the end of the day your ultimate arbiter of what is "ok". I'm reviewed every 3 years by the state or Oregon and I just do what they say to do.... if they don't have any problems with my website I don't change it (and I know they look at it). Hope that helps. Ben

My information is all public. You can find anything you need with Google.

Regarding questions about how those of us who started small have grown. My AUM / client history is below (formed business in late '06) which I think is typical of a small RIA with only minimal / medium connections to wealth who lives far off the Street: YE '07 - $0.31m / 11 YE '08 - $0.31m / 15 YE '09 - $1.06m / 19 YE '10 - $2.42m / 30 YE '11 - $3.25m / 34 YE '12 - $3.82m / 39 Probably will close out this year with $6-6.5m and 50+ clients. For what it's worth, I think there are many ways to success, and they mostly depend on what you want / define as success. I started at the urging of some friends, who persisted to harass me for several years after college. They suggested to me my business model based on my concerns, which at the time were: 1) I liked investing, I don't like dealing with clients / running a business (I wouldn't describe myself as entrepreneurial) 2) I had a full time job, and I hated the idea of marketing financial services to get a size which would sustain itself My friends just said to manage the assets of clients the same as my own, no exceptions, and just tell clients to take it or leave it. They told me to setup shop with the expectation that clients wouldn't talk to me, and keep it that way. Seemed reasonable to me, so that's what I did. For those who think this is so hard, I can only say that "yes" it take a long time commitment... but I think it's simple (maybe not easy). I would say that if you are managing your own money *and* you strongly believe you are exceptional at managing assets, I think the stretch to managing money isn't a big one. So what if you don't make money for 5-7 years... what does that matter? If you want a "job" that can generate high income immediately, well then I agree it sucks, but how many people really are doing this for that reason (maybe a lot, but I doubt it)? This is a job you can do on the side (obviously not ideal, but if you are managing your own money you likely are already doing that right?). Also, as with almost any business, the value (NPV) of the business lies deeply out in the future cash flows, and I think if you think of this as creating a business (not really my focus, but it's certainly an aspect of what I do this) you have to think the same way. Assuming you can do 2-3% above market after fees for 10 years (not 5) I can *guarantee* you that unless you are trying to hide, you will be found whether you doing any marketing at all. For me, I have always done no marketing, just word of mouth, mostly because I truly believe that what I wrote above. Your clients at the start aren't really what create the most business value (or value for clients themselves)... in the long term what creates value is a long run of above average performance coupled with clients who stick it out because they believe and understand what you are doing so they actually experience your above average performance (so many great investors fail this second test). There is no value in tricking / marketing clients to join you because they will be the first to bail on you (whether you are doing well or not) for the smallest reasons. They will then spread bad words about you and it won't do you any good - again, in the long run. It's much better to get clients / assets only when they are a good match for your philosophy, and to be continually clear about what your strategy is so that over time you can create a clear and accurate honest representation of yourself and your business. I believe genuine honesty coupled with performance (as well as clear speaking / presentation skills) are key to this business. Marketing is not remotely required if you only care about terminal value as opposed to near term income. The behavior of the money management business in general is clearly geared in the opposite way, and that is probably the biggest opportunity to those of us doing this on a small scale with a long time horizon. When I started my plan was that I would have to do it as a side business until I had $4-5m (with my fee / cost structure that means about $45k in income) which has proven to be pretty accurate based on my personal / family expenses. Also, I had the assumption that many clients would be on the fence until I had a 5-7 year track record because from I what I knew of psychology that is when a track record becomes "real" to most regular folks. Both of these assumptions have held true generally from what I have seen. Overall, I think I have experienced what could be described as typical business results for someone doing this solo without marketing. I think I've had some lucky breaks getting some big clients, or maybe also having some higher net worth friends than others may have, but I also started right before the Great Recession (and my portfolio focus is on financials generally) so maybe it balances out. Just my perspective, I appreciate others sharing their experience. My comments above weren't meant to disagree or argue with anyone with a different perspective, I just wanted to share my own thoughts as a small data point. Ben

I'm state registered (Oregon) and costs are very low. Maybe I paid $500-800 in startup, ongoing is maybe $500 / year. I do separate accounts, not a fund.

TTD - I don't use securities lending (to lend my shares). To get borrow info (availability and cost) they are the best I am aware of for retail. I don't use any real time data, so I'm not sure. This has basic financial data - similar to what Morningstar or others have on their websites. On SSRAP, I found many years ago and have owned since 2009. Quantumonline.com is a good site for exchange listed preferreds. The OTC / Pink Sheets sites also have ticker screening by type of security. I don't use the family office / friends and family stuff. I am set up as RIA only... I would say the improvement has been good. It is far from A, and all the examples I gave were within the last 12 months... perhaps others have had better experience, but customer service is rough. (and yes, most definitely always improving). Ben

I have used IB personally for a long time, and I also custodian SMAs there for my advisory business. I also own a large position in their stock, so I may be biased. Pros: 1) IB has very fair and transparent pricing. They don't try to hide their fees for you, and their stated goal for the $10/month pricing model is to ensure all of their accounts are break even at worst. 2) Executions are good. They route trades to the exchange on market orders, but also they tend to give me better limit order price improvements than any others. 3) Short selling -- they offer ability for you to get paid (transparently) for lending shares, and also offer pretty good transparency on cost to borrow for shorts. They also allow you to invest your short proceeds which shockingly some other brokers don't do. 4) Margin -- not recommending it, but their margin rates are amazing... another "Costco-like" low profit markup that encourages you to do more business with them. 5) Flexible reports -- non-intuitive at first, but their reporting is very very powerful to show almost anything you want. Will be helpful in the friends and family scenario. 6) Technology -- they may not have great support or UI but you know they will adopt new technology first... 7) Bonds -- they allow you to place standing limit orders on bonds... a surprisingly impossible thing to do with other brokers. They expose your order on their platform as well and maybe forward it to Bond Desk too (not sure how that works exactly). 8 ) No "Corporate Action" Fees (splits, tenders, etc) 9) Web Based Corporate Action tool 10) Web based tax basis adjustments 11) Web based trade cancellation request tool 12) ... etc Cons: 1) If you need real time data you have to pay, they don't subsidize like other brokers. 2) Access to some obscure, OTC issues. I haven't really figured out what make them choose to not support a security, but they have issues. One example is SSRAP... they don't allow you to buy, and if you held it in your account 2 years ago when they stopped supporting it, the price shows as the last price on that day (it's listed at $16 / share in all my accounts... hard to explain to clients why this is wrong). Also they don't allow trading in a lot of bonds (converts, canadian bonds, etc)... not sure what cuts them off, but they are not accessible today... this kind of thing (bonds) will get fixed, but it's annoying now. 3) Customer support -- They do suck. You can get most stuff you need done, but they have blind spots... see my comments below in no order: a) Their chat window for support is cool... but it has two issues. The chat response for discussions in my experience is slow... unnaturally slow. I feel like there is like 17 conversations going on... or maybe I just expect fast typers... not sure. :) This is compounded by the fact that the chat window doesn't have audio notifications, so you just have to sit there and watch and wait for a response (shitty). b) Secure login -- two factor login is great... I like it personally. From my clients (very copious) feedback, it's a pain for those who login infrequently. c) On the lack of trading certain securities, they can't articulate to me what the issues is. Maybe something about some OTC securites makes their electronic systems struggle... but for the SSRAP, they told me "this isn't a DTC eligible security"... so I contacted the DTC and it indeed WAS eligible. I went back to IB and they didn't really explain, but they did say "we can't have you buy it, but if you need to sell, call our trading desk and we'll help you out). This is classic IB. Not necessarily lieing, but being misleading on stuff like this is common. d) The customer is always right is not their motto -- I have had multiple arguments with their service group about various things where I was right, but they fought me and then didn't apologize. I was told for example that a certain form I needed had to be hard mailed, not electronically signed... the support person said "I've been here 7 years... blah blah blah". Turns out that they added the electronic signing ability 3 months earlier and this support person wasn't updated. But it's classic that they treated me like an idiot even though I was quoting their website to them. e) I have a client that read their site for instructions on resetting their secure login stuff through the phone system... it said their support line for that was open 24 hours... client called on Saturday and they were closed... turns out it's 24 hours during market action.... 4) Their web interface is problematic (both from an actual "does it always work" and also from a usability perspective. I have clients report issues... I think it all relates to connecting via a VPN (the account application breaks for clients through a common corporate VPN I know). This is an odd issue, but is emblematic of IB kind of just having some traders doing their app and web QA... 5) They don't support UGMA / Custodian accounts or Solo 401(k) or Coverdell accounts. I know I wrote more cons than pros, but frankly I love the company. They do so much right, and they treat you professionally and honestly. I think a lot of what they do wrong on the customer service front is to try to discourage rookies from getting on their platform and wasting their time (my issue with this is that they have jumped in the RIA business big and they haven't really figured out how to mesh that process with the clients of RIAs who are now on their system.) Hope that helps. A friend of mine who also owns the stock summed it up a long time ago "basically these guys are a bunch of Java programming and trading dorks... they aren't really into service). Fair enough, the result is worth the pain. Oh yeah, IB is run by a guy who has his entire network in the company stock, so you also know that they won't be the broker to pull and MF global and blow up your margin account. Ben