Sunday, July 29, 2007

Capitalist hero Charles Schwab

Perhaps no one on the globe has come to symbolize the rise of the investor class in America in recent decades more than Charles Schwab. Wall Street Journal (subscription):
When Mr. Schwab, or "Chuck," as nearly everyone calls him, opened his first brokerage office in 1971, the stock market was pretty much the exclusive sandbox of the richest 5-10% of Americans. Today, thanks in no small part to his company's financial market innovations, investing has been thoroughly "democratized," as he puts it, with more than half of working class adults now owners of stock. Creating wealth is what Mr. Schwab has come to regard as his "life's pursuit." He's accomplished that not just for himself -- his stake in the company is estimated at $4 billion -- but also for the millions of small investors who first came to be owner-capitalists by opening a Schwab account.
The impact has been felt by everyone. Blue-collar workers are now owners - through stocks, mutual funds, but mostly their retirement pensions and 401K plans.
"The wealth creation potential of this country is unbelievable; and it's going global," he says excitedly. He insists that one of the best policy changes in Washington in recent years was the Pension Protection Act of 2006, which provided for the automatic enrollment of workers into 401(k) plans. This is going to turn a generation of 20-25 year olds into investors, he says. And he predicts that workers at firms with 401(k)s will become acculturated to saving, and this will vastly expand the investor class in America. This is the one subject we talk about that seems to visibly get Mr. Schwab's heart beating faster -- and not just because it will expand the company's client base in the years to come. He predicts that more investors will mean "a much more informed citizen who has a stake in the economic machine of America. If you own a few shares of stock, or mutual funds, you have a piece of the action. A person's a much better citizen when they know that they're personally benefiting from the success of the country, the success of American companies."

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