The last time you spoke with your broker did he use any of the following words? Diversification, Price-to-earnings ratios, discretionary trading, lifting a leg (hes talking to you not your dog), leverage, divergence, fee-based compensation, escalator clause, tactical asset allocation and other mesmerizing words to place you in stupefying shock.

Brokers do that to let you know that you dont know anything about the market and you must allow them to make decisions for you. You dont know the language. You are just too dumb. Another mushroom.

Wadda ya mean mushroom? Didnt you know? Most customers are considered mushrooms. A mushroom is grown in the dark and fed horse manure. Now you understand why they treat you that way.

Then try to get him to explain commission structures of mutual funds. Oh, youre not allowed to ask that. You might want to read page 35 in the January 31, 2005 issue of Newsweek magazine for an excellent breakdown of this Wall Street scam. Maybe you better not. You will get mad at your broker.

Another one of those big words they dont want to discuss is redemption fees. This is an extra charge of as much as 2% of the amount that is deducted from your check if you sell within a certain period of time. Brokerage companies tell you it is to discourage frequent short-term trading which adds to their cost of doing business and increases the expenses that are charged to you every year. Having owned a brokerage company I can tell you this is more of that brown stuff they feed to the mushrooms.

The reason for redemption fees is to discourage you from selling. You might take money out of your account and that must be restricted in every way possible.

Some of the biggest words are associated with those special limited partnerships. These are definitely brain twisters. You can get these in real estate, hospital construction, oil and gas pipe lines and the most confusing one of all is technology. And they are all guaranteed. That word I understand, but be sure you read the fine print to see what is guaranteed. You remember the old one that they give it to you in the big print and take it away in the fine print.

How about placing a limit bid on a secondary distribution of a special claim on residual equity certificates? You didnt understand that? Believe me you dont want to.

When you are solicited by your broker, financial planner or anyone to buy any equity you must clearly understand what you are buying.

If you dont understand it dont buy it.

Al Thomas

Albert W. Thomas has spent most of his life in the field of finance. In 1965 he founded an insurance holding company, Security Dynamics Investment Corporation, after having been an agent and General Agent for several life insurance companies. In 1970 he became cofounder and president of Real Life Estate, Inc., that marketed a unique real estate and life insurance package.

After he became interested in commodities he bought a seat for his personal trading on the Chicago Open Board of Trade, which is now known as the MidAmerica Commodity Exchange. Later he became a full time trader and also acted as a commodity broker for a few select clients. By fellow floor traders Al is considered to be an excellent technical analyst much of which is outlined in his book IF IT DOESN'T GO UP, DON'T BUY IT! It became a best seller on Amazon.

In 1981 he sold his membership on the Exchange and with his wife, Carolyn, lived full time aboard their 41' ketch, the Aumakua (which means guardian angel in Hawaiian). They sailed in Florida and the Bahamas for two years.

He founded World Trading Group in 1984 that grew to the seventh largest introducing commodity brokerage firm in the U.S. with 35 offices from coast to coast, Alaska and Canada. It was sold in 1992.

Al is a graduate of Northwestern University with a B.S. degree in Commerce and is a member of MENSA. He is now president of Williamsburg Investment Company that syndicates his weekly financial column since 1999 to more than 300 newspapers and writes a financial market letter called Over My Shoulder that is quoted in Barron?s and many other publications. A 3-month trial subscription is available on his web site. He is a regular guest on several financial radio talk shows.

His favorite pastime is fishing.

Mr. Thomas is available for speaking engagements. Please call 321-453-5300 for more information.