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The Thesis
Schwab bet that deregulation of brokerage commissions would allow him to undercut traditional brokers, making investing accessible to everyday Americans for the first time.
The Story
When the SEC deregulated brokerage commissions on May 1, 1975 — "May Day" on Wall Street — Charles Schwab saw his moment. While traditional full-service brokers like Merrill Lynch charged hundreds of dollars per trade, Schwab offered discount brokerage at a fraction of the cost. The establishment scoffed, but ordinary Americans responded enthusiastically. For the first time, investing wasn't just for the wealthy — it was accessible to anyone.
Schwab continued innovating for decades: no-load mutual fund supermarkets, online trading, fee-free ETFs, and eventually zero-commission trading (which forced the entire industry to follow). Charles Schwab Corporation grew to manage over $8 trillion in client assets and acquired TD Ameritrade for $26 billion in 2020. Schwab's lifetime bet — that democratizing access to financial markets would create more value than protecting the old guard — is one of the most consequential in American finance, enabling millions of ordinary people to build wealth.
Key Insight
When regulations change, the fastest mover captures the opportunity — deregulation events create new categories and new leaders almost overnight.
“How we treat our customers, how we treat our employees — those are the things I care about.”
Charles Schwab
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See how Glen Bradford applies these principles to his own investing. Long Fannie Mae & Freddie Mac junior preferred — conviction meets patience.