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One aspect of the buy and hold mentality I feel is missing from the discussion is direct registering (DRS) the shares you invest in a company. The shares you b

One aspect of the buy and hold mentality I feel is missing from the discussion is direct registering (DRS) the shares you invest in a company. The shares you buy through a broker-dealer are held in "street name" meaning they are registered with your broker-dealer. You enjoy beneficial ownership, meaning you enjoy the benefits of ownership even though the title to the shares are in your broker's name. You have IOU's, basically. Because the shares aren't in your name, broker-dealers can lend them out to hedge funds shorting the company you're investing in. The shares can also vanish if the brokerage goes under. DRSing your shares at the company's transfer agent ensures that the shares are registered under your name (and not the brokerage's), and prevents your shares from being lent out and being used against your investment.

sigstoat 4y ago
> Because the shares aren't in your name, broker-dealers can lend them out to hedge funds shorting the company you're investing in. This is part of how they absorb the fees inherent in trading. Or you can use a brokerage which pays you part of what is made for the loaning-out, and doesn't absorb the trading fees. Or just don't worry about it, your chump-change investments being lent out doesn't matter. > The shares can also vanish if the brokerage goes under. https://www.investopedia.com/terms/s/sipc.asp https://www.investopedia.com/terms/s/sipc.asp Your brokerage firm made you agree to a bunch of documents explaining their SIPC insurance, where the assets will be transferred if they go under, etc, etc. It's not their fault if you just clicked through and ignored them. Stick with the various major brokers and expend your effort worrying about lightning strikes and sharknados.
- jonathanlb 4y ago
  > your chump-change investments being lent out doesn't matter. Who is to say my investments are chump-change? What's with the derision? I'm under no obligation to help broker-dealers make money off of lending out my shares, especially if those shares are being used to short the companies I'm invested in. If retail investors DRS'd more of their long-term holdings, it absolutely would matter and have an effect on shares available to hedge funds to short.
  - AdamN 4y ago
    You can also lend out your shares to earn the interest yourself: https://www.fidelity.com/trading/fully-paid-lending https://www.fidelity.com/trading/fully-paid-lending
jjav 4y ago
> The shares can also vanish if the brokerage goes under. No, shares are covered by SIPC up to 500K. Brokers may have additional insurance above that but at the very least 500K is covered.

sigstoat 4y ago

> Because the shares aren't in your name, broker-dealers can lend them out to hedge funds shorting the company you're investing in. This is part of how they absorb the fees inherent in trading. Or you can use a brokerage which pays you part of what is made for the loaning-out, and doesn't absorb the trading fees. Or just don't worry about it, your chump-change investments being lent out doesn't matter. > The shares can also vanish if the brokerage goes under. https://www.investopedia.com/terms/s/sipc.asp https://www.investopedia.com/terms/s/sipc.asp Your brokerage firm made you agree to a bunch of documents explaining their SIPC insurance, where the assets will be transferred if they go under, etc, etc. It's not their fault if you just clicked through and ignored them. Stick with the various major brokers and expend your effort worrying about lightning strikes and sharknados.

jonathanlb 4y ago
> your chump-change investments being lent out doesn't matter. Who is to say my investments are chump-change? What's with the derision? I'm under no obligation to help broker-dealers make money off of lending out my shares, especially if those shares are being used to short the companies I'm invested in. If retail investors DRS'd more of their long-term holdings, it absolutely would matter and have an effect on shares available to hedge funds to short.
- AdamN 4y ago
  You can also lend out your shares to earn the interest yourself: https://www.fidelity.com/trading/fully-paid-lending https://www.fidelity.com/trading/fully-paid-lending

jjav 4y ago

> The shares can also vanish if the brokerage goes under. No, shares are covered by SIPC up to 500K. Brokers may have additional insurance above that but at the very least 500K is covered.