04 January 2020

The Stock Broker's Problem

"New information makes new and fresh ideas possible."
-Zig Ziglar
Not just stock brokers, but all agents of information.

Information scarcity is disappearing.

Forty years ago traders and investors got most of their information from information agents known as stock brokers. It was hard to know what a company’s reported earnings were to say nothing of what the company was saying about its prospects between earnings reports. Stock brokers also provided companies with critical information from traders and investors and their feelings about a given company’s stock.

Other information agents have a similar problem.

Forty years ago, airline passengers had no idea which airline flew where and when they were scheduled to fly. Airlines also had no easy way to find out who wanted to fly somewhere.

Today, of course, there’s a deluge of stock market and travel information and no shortage of ability to connect… to say nothing of Reg FD. So paying a commission to a human to provide that company information to the trader or company or an airline paying 10% of revenue to a human who will use a terminal instead of the passenger using a computer [phone] hardly makes sense for the airline.

Movie studios once had to wrestle with information scarcity, and so did talented creators. Actors weren’t sure who was making what, and studios had imperfect information about whom to cast. Enter agents who controlled the information flow in Hollywood.

Today, IMDB (and proprietary tools) surface enormous amounts of information for the studios. They know who’s working on what, who’s a pain in the neck, who can add to the effectiveness of a project. And the creators are part of networks, formal and informal, that get them information faster and more directly than a single human ever could.

The same thing is happening to car dealers. In fact, just about any job where hoarding information was standard operating procedure then charging a fee is now in danger.

When your clients and customers know as much as or more than you do, it’s difficult to be an old-fashioned agent who makes money based on information scarcity.

There are 2 alternatives for purveyors of information… become a network hub who creates value through information abundance… become an information curator who sifts through information and delivers the best data to customers for a fee…

Or, take my approach and become an information user (vs agent) as a principal profiting from effective use of selective information and data. You simultaneously remove yourself from the interminable race to gather and deliver all available information and become much more focused on profiting from select slivers of information.

A lot simpler.

My Most Popular Posts

TAOST Topics

How To Trade Emotional Capital simple trading Simple Day Trading futures trading swing trading Emini Trading How It Works stalk candidate trade idea Bitcoin Daily Simple Trading Habit TAOST market update support and resistance trading intraday Process price action simple trading tools what to buy what to trade Best Retirement Investments Chart Patterns Focus New Trader Sins Swing Trade TAOST Trading principles day trading lifestyle how to day trade keep it simple risk risk management trends Are you too old Confidence FAQ FASTQ How To Invest Income streams It takes as long as it takes MAR Retirement Crisis Retirement Investment Retirement Trading TAOST Power Zones TAOST Price Clusters Trade Pattern Trading & Poker day in the life of a day trader how to trade Bitcoin learn to trade performance improvement sell signal side hustle the power of simple trading psychology trading rules trend persistence ultimate side hustle Buy Signal Charts To Watch Coil Distraction How To Trade EUR How to trade SPCE Mistakes Oh S#!t Gap Oil Optimization Process Ownership Portfolio Trade Private Equity Professional Gap Retirement 911 Risk Arbitrage S&P 500 Sacrifice Shooting Star TAOST Price Structure Trading Components Trading Myths Value Why You're Only 1 Setup Away chaos theory compounding context diversification downtrend extra money financial freedom how much money how to information is the stock market random kis linear regression channel lock limit down meditate money money management negative compounding optimize thinking pandemic position size prediction quantum leap improvement random random market update risk management plan sector selloff simple day trading risk management simple day trading strategy that works stock broker trading secrets training trend analysis