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Stock Certificates or street name?


MCN
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Hi all,

 

In light of the recent MF Global scandal, i have a few questions about the safest method of holding equity investments.

 

Which investors here prefer to hold their equity investments in certificate form rather than under their broker?

How do the Buffetts of the world hold?

 

Are there actually any risks when you hold certificates and your name is on the share register?

 

Can anyone recommend a good 'certificated' broker for US stocks?

 

Is it possible to hold the share certificates for European, Japan stocks?

 

Does anyone have any general comments on the topic?

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I have had some stock certificates through the years, my parents used to hold all of theirs in certificate form.  It's a pain, total pain.

 

My parents kept all their shares in a safe deposit box at a bank.  So to sell shares they'd have to drive to the bank, get the shares out, make copies, mail them to the broker, wait a few days and then sell.  There might be three or four days between the decision to sell and the broker executing the trade.  If you overnight mail it I guess you can achieve execution in about a day, although this is costly again because of the premium postage.

 

I know with my broker (Fidelity) I can request anything in certificate form, I think there's a $35 or $45 fee per stock certificate requested.  I only did this once when I donated some shares to a charity and it was easier to take the certificate and sign it over in person.

 

I guess in short I don't see the point.  For each purchase you're going to be paying $35-45 plus commission, you now have the risk of something happening to the shares in transit or in storage and you have a large delay in selling.  Not worth it to protect against a MF Global, you're probably better off opening a few different brokerage accounts.

 

I guess the corollary is do you keep all of your cash at home instead of at a bank?  You're basically asking the same thing, brokerage houses have SPIC for stocks, commodities have no such protection.  SPIC protects against fraud by the brokerage up to $500k per account.  If you have more than $500k just spread your assets between institutions.

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