European Stars And Stripes (Newspaper) - August 24, 1986, Darmstadt, Hesse                                Sunday August 24, 1986 the stars and stripes Page 19 investor s guide by William a Doyle a q. I placed an order with a Dis count brokerage firm to buy 1,000 shares of certain Slock at 1%. My order was filled in three separate transactions of 100. 300 and 600 shares on different dates. I was charged the brokerage firm s mini mum com i Mission of 125 on each of inc smaller trades and i business news. 600 Trade making my total commis Sion charge $86.17. Lasi fall. I bought 1,000 _ _ shares of an Doyle other Slock at he same Price from the same brokerage. That was exc Fulcd As one 1,000-share trans action and my commission charge wasj54.35. When 1 protested about my lat est Purchase being handled As three transactions  one i was told i should have said i wanted to buy 1.000 shares Only Al the Lime i placed he order. If this is so it seems they could have filled my order in 10 trans actions of 100 shares and charged me 10 minimum fees of $25 for a Tola of s250. What is your opinion of this a. This in t going to please you bul the brokerage firm la right. To put la quite simply Yon placed your order wrong. If Yon wanted to boy the 1,000 shares in one transaction it was your responsibility to so tree Fly when you placed the order Luu i railed in All or none order. When Yon place an order to buy or wll More than 100 shares Gnu broken ask in you want your Pur Chase or Sale executed in one Irani action or if you re willing to hate it handled in multiple trades. Some broken Don t it More Likely that question will be asked by a flue Nice brokerage firm than by discount brokerage. Unlike discount find most of which simply execute boy and sell orders the typical fall service brokerage provides its customers with More personal service. On the other Side of the Coin you probably paid a lower total commis Sion to the discounter than a full service Linn would charge. Q. As a modest investor i have a Bone to pick with the Utility company whose Bonds 1 bought on april i. I paid 108v j1,087.50 for each 1,000 Bond. I received a notice dated july 1, that these Bonds were called for redemption to be paid off at 11.045.40 per Bond on aug. I. Asa result 1 loss $42.10 on each Bond is it ethical for a company to Call a Bond at a lower Price than an investor paid for the Bond if so brokers should be required by Law to have at their fingertips the ear Liest Call permitted on each Bond and to disclose this information to every customer prior to Purchase. A unfortunately for you and Many other investors the company acted in an absolutely ethical Man Ner. The Call provision was set at the time the Bond was issued. The company had every right to Call in your Bonds and redeem them using the Call provision. Now that interest rates have come Down companies which is sued Bonds with High interest rates Are issuing new Bonds at lower in Terest and Are redeeming those older Bonds if the old Bonds Nave Call pro visions. Tax Law May cause sell off new York not while the pro posed tax Bill will change the allure of a wide Range of securities Over inc coming years investors arc Likely 10 act sooner rather than later in taking profits on stocks. Investment experts say there could be a wave of sales Over inc coming months of securities in which the investor is holding an unrealized Long term capital gain that gain would be taxed at rates or 20 percent this year and 28 percent next year if the Bill becomes Law. Mosi. If Noi Alt of the proceeds of those sales however Are expected to be slowed right Back Inlo the Market i. Is neutralizing the Overall Impact on the Broad Slock Market averages say Wall Street executives. Most people with unrealized Long term capital gains will sell i hair shares and then just repurchase them said George l. Ball chief executive of Prudential Bache securities inc. Jeffrey m. Applegate a member of inc investment policy group of . Hulton & co., we certainty arc Likely to get More volume in the Stock Market in the next few months but Overall the Impact on prices is Likely to be Neutral. The old la Laws included a lower tax Rale on Long lorm capital gains than for Many other kinds of investment income and thus encouraged investors to look for such gain rail her Ihnn other kinds of income. One effect for instance would be to encourage investors in la shelters to realize ail of the benefits they can before year end when the loopholes will close. Indeed individuals Are Likely to think about investments in a fresh Way say securities opens. They will have More regard for the Bottom line the eco nomic Benefit that will produce Inonu for investors rather than just tax Bene fits. I m in simple terms Ball said that inc new Laws would make investments that produce predictable regular returns such As a High dividend Utility Slock or a High yield june Bond far More at Tractive than investments that generated Large but unpredictable capital gains such As a speculative Stock. The reason is thai income will generally be taxed Al lower Levels than previously and capital gains Wili face higher taxes. Clearly this will re proc assets across the  mid apply Gale. It will be More posit ivc for stocks and Bonds and less advantageous Lor real assets such As real  Wall Street executives noted that in vestments used by wealthy individuals in the highest lax bracket of 50 percent to build up Large lax deductions will no longer be As attractive under the pro posed individual lax ceiling in the tax Bill. There will be a new generation of such so called direct investment products Likely to produce Strong Cash yields. Say securities executives. These products will have to be income driven not  said James a. A Lorn. Co chairman of the primary capital markets group Al Scarson Lehman or others inc. Stern said there is Likely for example to be a Large Market supplying wealthy individuals stuck with old partnerships that produce unwanted lax benefits with partnerships that arc the Mirror oppo site generating High Levels of taxable in come up from. Another Basic change for investors is that they Are Likely to be More prone to Trade heir stocks inc executives said. Since there would b no difference in lax treatment whether a Stock is owned for iwo weeks or two years an investor Curt Trade out of a Security without regard for How much Lime has elapsed. That should also prove a plus for securities brokers who would enjoy higher commission revenues. In addition High dividend stocks such As utilities arc Likely to become More appealing. For Init Nee if a Slock paid a 9 percent dividend before an investor in the to per can Tan bracket received just a 4.5-Pcrcl it dividend after taxes. Under the new Law the investor would receive a 6.5-Pcreem dividend after taxes. Sales of fax free Bonds soaring by the los Angeles time new York tax Reform has worked wonders for Andrew Geller s popularity. The los Angeles Bond dealer said he cannot pull into his driveway without neighbors besieging him for tips on buying municipal Bonds. Al his office Loo we Are being bombarded with Calls Geller senior vice president of the tax free Bond specialist munic corp said. There is a frantic frantic craze to buy municipal Bonds right now since congressional tax conferees approved the most sweeping Reform of the nation s tax Laws in history municipal Bond sales have surged As much As 40 percent at firms specializing in these in vestments which Sre exempt both from Federal and slate taxes. As investors saw How the final Bill was shaping up depos its in trusts that invest in municipal Bonds have risen even More dramatically to a monthly equivalent of $1.2 Bil lion from $750 million in july. We have seen a tremendous Rush into municipal Bonds since the Bill emerged from the House Senate conference com Mittee said George Bernard senior vice president of Moseley securities corp., a new York Tan free securities specialist. Slock pulse by United  e ism gybe comport Max a flt a to Kun Slock by bunt Lam us co Doanh   Vaj Chih Earni be old 2,b72�� 73 i 1.90 10.0 2.7 5,1,1 Dtta ills Mlyn .j,so9, 1,741.500 is 11,621 How 1.4w.oco 21 1.404.200 52k ii Leo 2sw i.14s.200 47v 1.133.70 91 1,043.100 Ion. It 18.0 a.1 167 14.0  310 11-0 2.8 to 1d.o 6.07 12.0 1.9 a commute u.mm.icjwki.1 com ctr Ewnin a yi0 73 my 390 10.0 2.7 and because real interest rates will fall because of lax Reform tax free Bond issues can Only become More and More  the Specter of lower interest Rales is Only one Factor spawning the buying euphoria. The Bonds emerge from the new lax Bill As one of the Hui remaining lax favored investments. Investments having huge lax advantages for investors under inc current tax taws such As stocks and limited partnerships in real estate lose i hair tax Lus Ler under the new tax Bill. And the Avail ability of popular Ira and 401 k tax deferred retirement investments will be sharply curtailed. So even though the legislation is not yet Taw and the changes will have no effect on americans 1986 lax Bills Securi ties dealers Are advising their clients to switch out of such investments and into municipal Bonds As soon As possible. It is advice that thousands of investors principally individuals with As Lille As $ 5,000 to invest Are heeding. Also fueling the buying spree is the new tax Bill s elimination of Many popu Lar deductions such As consumer interest and sales lanes. Investors who lose those deductions will have higher unable in Aimi ctn Politi he a Tom a Volans Todtor v 1" 2t � 1h13 is of 131 in 047 18.0  s7.d 0,80 17,0 2.3 1.91 t-0 3.49 8.0 1.3 m old  Chiungi Istl 13 Iron thu come and thus brokers say. A arc air need for income that is tax free. Thai is particularly True they say for investors paying High stale lax  a perverse Way Tan Reform has been a Friend to municipal Bonds Ever since the crusade for a fairer and simpler lax system began Well Over a year ago. Uncertainly Over How the Tan Reform architects would Ireal tax exempt invest ments sent Bond prices tumbling. Thus Bond yields Rose and Kepi rising to a level higher than any other government or commercial invest men available. Because of the uncertainty investors were wary of this Market for a while. Which gave us Unis tremendous yield Opportunity Carolyn. Cole of Paine Webber said. With the buying spree of the last few Days Bond prices Are now rising again which Means that yields Are falling slightly. But a High Quality 10-year municipal Bond is still yielding Between 7 percent and 7v percent tax free far better than any government incest men or certificate of Deposit now available. Even under the new lax Bill which reduces the lop individual tax rate to 28 percent from the. Current 50 percent an investor would have to find a taxable investment of nearly 10 percent to do belter than 7 percent tax free. The lower personal tax Rales proposed by lawmakers will have the effect of Cut Ting the after lax yield of municipals. The higher the lax bracket the More an investor is aided by tax free income. But that negative is More than offset brokers and analysts say by the fact that most other investments will completely lose their attraction As tax shelters. Particularly popular with investors Are Bonds issued before aug. 7. That is the cutoff Dale for so called private purpose municipal Bonds which Are debt Securi ties issued for such things As single family housing and student housing. Any Bonds issued after that Dale Are no longer lax exempt. Because there is still some doubt about which Bonds will remain lax free and which will become taxable under the Bill brokers Are advising customers to invest Only in Bonds issued before aug. 7 or tit those that specify that they arc essential purpose Bonds