Salespeople vs. traders?

Question

A textbook excerpt:

Traders make money by selling high and buying low to maximize spread. (Easy to understand.) The salesperson has a different incentive. The total return on the trade determines the money a salesperson makes, so he wants the trader to sell at a low price. (Why?)

Answer 1

If that textbook doesn't explain that statement anywhere in the book, you should throw it away, because it's just going to confuse you in the long run.
In the context of that statement, a trader and salesperson are the same people - stock traders.
There are two ways to open a position when trading stock.
Buy long - if the price of the stock goes up from your initial purchase price, you make the difference.
Sell short - if the price of the stock goes down from your initial purchase price, you make the difference from your initial transaction.
When you, the trader, sell short, you're considered a salesperson.

This is how selling short works and how you make money from the transaction -
--Stock is currently worth $10
--You expect it to go down, so you sell short (a short sale).
--You borrow a share of stock (or however many you want) from your broker and pay him his commision as with any purchase.
--Your only obligation to your broker is to give him back the stock you borrowed, or pay him the price of the stock as it's worth at the moment, when you want to close your position.
--You sell the stock you just borrowed to person A for $10 (you sold the stock, so that makes you the salesperson).
--You have $10 in you pocket, but no stock.
--The stock drops to $5
--You buy it from person B for $5
--You have $5 left in your pocket (from the sale to A and the buy back from B) + one share of stock.
--You return the shares of stock you borrowed from your broker (your position is closed and your obligation to your broker is complete).
--You have $5 worth of profit in your pocket.
--You, the trader, made a short sale, so I guess that would make you a salesperson.
--You, as a salesperson, that sold his shares short to A (short could mean, "I'm a little short, can I pay you what I owe you next week") wants trader B to sell at a lower price then you sold to A
--You may have to re-read this a couple of times for it to sink in, but it will make more sense than what you read from that textbook.

--Borrow from your broker.
--Sell short to A.
--Buy from B, at a lower price, than your short sale to A.
--Keep the difference and return the shares back to your broker.

Answer 2

With exception of major corrections like 1987 and 2008, I actually agree with you. Nevertheless, fundamental analysis does improve a traders profitability. What I admire about WB isn't his returns, but his dedication and passion for what he does. I combine reading financial statements with technical analysis. If there are 500 stocks in the S&P500 to choose from, why compromise between analysing stock prices and analysing the underlying businesses?