← The Master Investor Podcast with Wilfred Frost
The Master Investor Podcast with Wilfred Frost
Democratising Investing: Charles Schwab CEO Rick Wurster on the Future of Finance
00:41:20
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A
Our message to our clients is have a plan, stick to that plan rebalance. It's about time in the market, not timing the market. And that's what makes, that's what drives long term financial success. What's interesting actually is the average age of our clients has come down the last several years as more young investors engage in markets. The average age of our client is now in its 40s, where it used to be in the 50s. The average age of our new client is in the 30s, and about a sixth of our new clients is under the age of 24. So we really are seeing incredible engagement from young investors which are driving down the overall age of our client base. The biggest concern I have related to markets really likely comes from inflation. I think in an inflationary world, you'd have to see bond yields rise. And given the amount of indebtedness across the globe, I think that would be quite painful. To compress valuations, make the federal, you know, the different central banks restrictive, which ultimately could then lead to the double whammy of some inflation and some weakness in the global economy.
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Welcome to the Master Investor Podcast with me, Wilfred Frost, where we celebrate and learn from the success of the greatest investors, business leaders and politicians in the
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world, giving you, our listeners, the edge.
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B
The Master Investor Podcast is sponsored by Elseg Interactive Brokers, the World Gold Council and BMY Investments. Please do remember the views expressed in this podcast are for general information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice or a personal recommendation. More on that in the show notes.
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C
My guest today leads one of the biggest investment firms in the world, perhaps the biggest for retail investors, Charles Schwab, which has over 38 million client accounts and over $12 trillion of client assets, roughly split between advisory and investor services. I'm of course talking about Rick Wurster, who became CEO of Charles Schwab at the start of 2025, having joined the firm and in 2016 following stints at Wellington and McKinsey.
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B
Rick, welcome to the Master Investor Podcast.
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A
It's a pleasure and an honor to be here. Thanks for having me.
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C
I wanted to start, if I may, just with the origin of the firm, of course, by its namesake, Charles Schwab,
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B
and when it was founded and what he set out to do.
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A
Sure. So our firm was started about 50 years ago with a very simple premise of trying to get more people invested in equities and in our country, if you go back to where we really got our start, it was May day in the mid-70s and commissions were being deregulated and most firms took that as an opportunity to actually raise the price of commissions. And Chuck Schwab took it, chose a different path that day. He brought down commissions and that allowed investing to be a lot more accessible for the everyday American. And began a period of 50 years where more and more people began to get invested. You know, back, back at that time period, if you were very wealthy, you could be an investor, but if you didn't have a lot of money, you really couldn't get invested. There was a lot of barriers to investing, and that is no longer the case. And we're proud to be a firm that is here for every type of investor of every wealth level, every time horizon. And the last 50 years has really proven a great time to help people get invested.
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C
Well, whenever there's a story about democratizing access to the market, I celebrate it. It's a big kind of reason behind launching the podcast in the first place. And clearly today you guys have grown enormously since then. A big advisory business which is about 5 trillion or so of your assets. And that allows RIAs, registered investment advisors, often known as IFAs in the UK, to manage their clients assets on your platform. And then an investor business with about 7 trillion of assets for retail clients, where obviously they manage things more directly.
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B
I read that assets rose 20% last
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year, which is insane growth when you're talking about such big numbers. As a starting point, what drove that? Which side of the business was it? Was it outright inflows or just the market rising? Break it down.
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A
For me, it was a combination of things, but it really starts with the fact that we put the client at the center of everything we do. And we feel like if we put the client at the center of everything we do, we're going to be able to deliver for them. We're going to make them better off in their financial life. And if we have an important role in making clients better off in their financial life, they're going to do more business with us. And last year was a great example of that. We brought in about $519 billion of net new assets to the firm. So that's the flows into the firm. And then our clients grew their assets because of the strong bull market last year. So it was a combination of factors that drove our growth. But it all starts with delivering for the client. We really have three main businesses. You mentioned two of them. We have a large business dealing directly with retail clients, primarily in the United States, but we serve clients all over the world in more than 100 different countries, we serve advisors and help them meet the needs of their clients. And then we serve employers and we do that all over the world as well. In fact, some of our biggest stock plan clients, we have some in the uk, some all over the world. So that's our business. It has been growing well, I think in part because of how much interest there are in markets.
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B
This podcast is sponsored by Interactive Brokers. Building wealth starts with the right broker, and Interactive Brokers helps you reach your goals with powerful tools, global market access, low costs, and unmatched financial strength. That's why the best informed investors choose IBKR. Learn more at ibkr.com masterinvestor.
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C
I wanted to dive in first, Rick, if I can, to the retail clients side of your business and what's the range of client sizes that you serve and the sweet spot?
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A
You know, we serve retail clients of all sizes, of all types, of all different investment styles. We work with clients that are just getting invested. In fact, we recently opened up something called our teen accounts, which makes investing available to people all the way down to age 13. They can have their own account which they can trade in and all the way up to some of the wealthiest people in the world. And we are able to deliver for each of those what they want and need.
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C
And what's the average age and the kind of trend going on there?
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What's interesting actually is the average age of our clients has come down the last several years as more young investors engage in markets. The average age of our client is now in its 40s, where it used to be in the 50s. The average age of our new client is in the 30s. And about a sixth of our new clients is under the age of 24. So we really are seeing incredible engagement from young investors which are driving down the, the overall age of our, of our client base. And I think that started back in Covid. You had a group of young investors that, that got engaged in markets for the first time. And now you look at the Gen Z generation and they are 45% more likely to be an investor by the age of 21 than millennials. So it's just wonderful to see that kind of engagement, that kind of interest in markets. Saving early and investing is a recipe for financial success. So we love to see it.
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And what do you think?
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C
Covid is obviously a trigger. I mean, it's lucky, I guess markets have risen since then or, you know, all else equal and they've gotten the bug, as it were. What's kind of driven that moment though? Why do you think They've stuck at it.
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A
I think a few things have taken place. One, I do think there's been an emphasis on financial literacy. And what that has done is raise the knowledge around the importance of saving and the power of investing and what it can do for your wealth over time. So I think that's number one. Number two, you then did have a period of COVID where people got more interested in investing and trading because there wasn't a lot else for them to do. And in America, they were being handed some checks, and so they were looking for how to put that to work, and investing became the vehicle. The third thing that I think has happened is returns have been strong over that time period. And so you have a group that took some of the money, they got, got interested in investing, and they've seen their wealth grow, grow. And so by seeing that, that growth in the values of their portfolio, I think that increases their enthusiasm for being an investor and makes it more a part of their life. And then more recently, I think the high levels of engagement that we've seen in markets is in part driven by the age we're living in, where there's just a lot of news. And so if you go back two years ago, a typical amount of trades that we would see in a day was somewhere around 5 to 6 million a couple years ago. And now we're more, you know, into the 9 millions, sometimes 10 million trades a day on average. So we've just seen an incredible increase in investor engagement, which I think for the long run is terrific to see.
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C
That's really striking, the pickup in volume as well as number of clients. I'm interested as well. If you were able, maybe you do have the data because you're Charles Schwab, but if you were to rewind to the prior generations, is this early level of opening account much younger than my generation, I guess I'm sort of younger. But our parents generation, do you think they're getting engaged much earlier?
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A
Without a doubt. Investors are getting engaged at a much younger age, about four years earlier on average. And by the age of 21, this generation is 45% more likely to be an investor than a millennial. So you are seeing a real difference in when people are getting invested. And I think that's very important for the future because we know the earlier that you start saving and make it a part of your life and become an investor, the more wealth you're going to grow. For us here in the United States, we're launching something called the Teen Account, which is we also are seeing in the United States something called the Trump accounts, which will give children at birth, will be investors right at birth. And I think that is something powerful for our country because the importance of saving and investing your life is paramount. And if you can learn to do that as a child, that's something that'll carry through and make people better off in their life. So we're thrilled to see that, thrilled to see the engagement generally and think it's a wonderful thing that young people are so interested in investing. And it's not just that, Schwab. You see it in social media, the interest in places like TikTok and Instagram, YouTube. This is what young people are increasingly focused on and we love it.
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C
Yeah, I mean, listen, Trump accounts, fantastic. And with Michael Dell's unbelievable gift on top, you know, I wish we'd do something kind of similar over here, but you know, I think that generational thing as well, it's, you know, my parents generation, it's by property to start. And I think it's shifting, isn't it, towards something more accessible in equities and the like. My final kind of question this area, Rick, is I don't know if you have this statistic, but your gut feel on it would be great either way that what the AUM adjusted average age of your client base would be, I imagine a lot higher than the sort of 40s that you mentioned with the wealthiest clients being older. Because one of Tom Lee, who's a friend of the show's sort of big bull cases is this huge amount of wealth that sits amongst the older generation and that that's going to be passed down at some point to younger generation where the asset allocation will suddenly shift to much more risky assets, to equities maybe rather than bonds.
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Is the AUM adjusted average age of
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your client base a lot higher?
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Without a doubt. If you look at where the wealth sits with our clients, it's among our older clients that have had a long career and the chance to save, the chance to invest, the chance to sell, businesses grow, businesses have thriving careers. And so the wealth definitely sits with the older generation. And for sure we will see a large wealth transfer in the coming, coming decades. And it's an interesting point about what that means that I do think that will mean that money transfers to individuals that are younger have a longer time horizon and therefore should be invested more aggressively. So I certainly see the case that Tom is making and when I look at our client base, the wealth definitely sits with our older clients.
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This episode is brought to you by Elseg, the leading global financial markets infrastructure data and analytics provider. To learn More about how LSEG connects businesses, investors and markets worldwide, visit elseg.com
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C
Are there any other kind of big observations you have in terms of positioning of young clients versus older clients or even retail clients versus institutional clients? Just the sort of big shifts that might have been taking place over the last five years or so?
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A
I think as I look at young clients, there's a few things that are similar and a few things that are different about young clients versus probably prior generations. One thing that's similar and I think is often overlooked is that this is a group of really thoughtful investors that is, that is planning for their life and making saving and investing a part of it. One third of the financial plans that we did last year for clients were for young clients. They wanted to know how to pay off their student debt, how to save, to buy their first house. You know, how to begin to think about, you know, their retirement, which is 30 or 40 years away. So young investors are thoughtful just like the prior generation. Some of the things that are different are one where they get their information is different. They're far more likely to go on to one of the large language models to do investment research. They're more likely to go on social media and listen to influencers about how they're approaching markets. And so we at Schwab have had to shift and now we put a lot of our content out on YouTube and Instagram and other places so that we can reach the young investor as they're making investment decisions. In fact, we're the most followed financial services firm on YouTube. So we're trying to go to where the young investor is in the way they like to invest. Clearly they're more digitally inclined and so they're more likely to go onto a mobile app than to go to our website and take on activities. So it's raised the game for the mobile experience and we are leaning into that and making it an outstanding experience for them. The final difference that I would observe for the young generation is they're more likely to be invested in digital assets. The young generation is certainly interested in Bitcoin and other digital assets and have made it a part of their asset allocation. So those are a few of the differences that we see. But the number one thing that I would point out, which I think surprises people, is that on average, the young generation is a, a very thoughtful set of investors, just like the prior generation.
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C
It's really striking, the statistic about proper financial plans as well, it suggests thoughtful investing, not gambling. Which brings me to my next question. And I've heard you talk about this before. I'm passionate about investing, not so much trading and certainly not gambling. And it's always kind of hard to where to draw the line in that. But I always sort of think the market is mathematically against you in gambling, whereas with research it can be in your favor when it comes to investing. Where do you put prediction markets within that?
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A
I want to highlight the point you just mentioned, which I think is so true. The longer you're in markets, the more likely you are to make money. That probabilities on your side, if you hold equities for 10 years, you're very likely to make money if you hold them for 20 years. I don't think there's been a 20 year period where equities didn't go up. Bond bonds have done well over long periods of time. And so your probabilities actually go up the longer you stay with investing. The opposite is true of gambling. You're going to lose on average and the more you stay with it, the more you're likely to lose. And so the payouts are very different. And so we are very much outspoken on this topic because we want individuals and in particularly young investors to know the difference between being invested in markets which are over the long run going to going to grow your wealth and participating in gambling or prediction markets which over time are going to lower your wealth. As it relates to prediction markets. I have a few views on prediction markets. Number one, I think prediction markets started out with the best of intentions and to give people access to different financial events that you may want to take a position on. And I think there's a role for that and it makes it real simple. You can understand the probabilities and the likelihood of something happening and take a position. And then I think the election, the presidential election in the United States came along and it drew tremendous interest and volume into prediction markets. And these prediction market firms thought to themselves, well, gosh, this is amazing. Look at the volume coming in. We're making tons of money. How do we replicate this on a more frequent basis other than every four years in a presidential election? And of course they thought to themselves, well, every Sunday in America there's football games that a lot of people care about. And they got into sports gambling. And that now is 90 to 95% of all the volume in prediction markets is associated with sports gambling. And that's something that as you said, and we strongly believe is very different than investing. And it doesn't mean, you know, people want to gamble a little bit of money and treat it as entertainment. That's certainly their personal choice. The big thing that we believe is that we don't want in particular young investors to confuse the power of buying stocks and bonds with going on and, you know, and betting on sports.
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Yeah, I think there could be a problem to come. And the pace. I was still there when it was all being legalized in the US the pace of legalization of sports betting without the same level of education certainly worried me at the time. And I fear it'll create a problem down the line in the US But I guess we shall see. I also wanted to touch on. You mentioned already the impact of tech broadly, but AI and tech on investing in general. Where do you stand on this? Is AI something that you think will significantly hurt a lot of smaller players, but it won't hurt you, or are you a little bit threatened by it?
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Expand.
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Expand on that.
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For us, I think AI will help accelerate our ability to fulfill our mission as a company. You go back to where we started about why we started as a company. It was to help people get invested, to help them be successful in their financial life, to reduce barriers to investing. And I think AI is going to allow us to do that for more and more clients. We use AI in a few different ways. We're using it to make us more efficient. We're using it to help serve clients today. Where I think it helps us fulfill our mission more in the future is that we'll be able to reach a new set of clients in ways that we couldn't before and provide personalized insights that help give them the confidence to be a saver, give them the confidence to be an investor and to grow their wealth. Certainly AI will make us more productive. It already is. We're using it in lots of ways today that are helping our client interactions, that are bringing down expenses per account that we manage. And so I see AI having a long Runway in our industry and shaping it in many ways.
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This episode is sponsored by BNY Investments. BMY Investments is part of bmy, a global financial services company supporting investors and institutions around the world. This sponsorship does not constitute investment advice.
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C
Let's touch on interest rates and your outlook there. I mean, my first question on this, clearly you make a lot of revenue and earnings from the money in your client accounts that's sitting in cash and you can earn a little bit of a premium on that.
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Does that mean actually when clients are
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bearish and cash Balances increase that, that,
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that boosts your earnings a little bit
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or is that too small of a marginal point?
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Well, no, that's true. If clients go to cash because they're concerned about equities or cash levels rise, that tends to be what we would call transactional cash, meaning it's just sitting around for a short period of time. Therefore it tends to sit in our bank and we do earn a spread on that and that grows our revenue. So actually in a, in a period like we're in today where rates have have risen a bit and clients have on the margin, increased their cash position in general, it's gets, if you think broadly is, is a conducive environment for our, for our business.
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C
Interesting. I guess that might then lead to markets falling, I guess all else equal, which, which could then bring down AUM in turn. So we'll see what happens in 2023. Obviously there was a bit of a scare before you were CEO in the rearview mirror now about interest rate exposure in your held to maturity portfolio. How are you positioned now on that? And we've just had this massive shock, potentially inflationary shock with the Iran war and it's adjusted all sorts of rate expectation. What's your outlook for rates?
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Our balance sheet is in really strong position. The move in interest rates hasn't impacted that in any way. We've got lots of capital. Importantly, when you look at our investment portfolio, we think it's matched to the liabilities. And so as a result we feel great about where our balance sheet is. And what we like about that is it allows us to focus on what we focus on on a day to day basis which is trying to help our clients navigate these kinds of environments. We're a company that was built to weather all kinds of financial markets and to be there for clients during those. And so we took 30 million retail client calls last year and answered questions about, hey, how does this geopolitical issue affect my portfolio? Do I need to go to cash or are markets overvalued or what's this crypto stuff? So not only does our business flourish in all market environments, but importantly we want to make sure we deliver for the client across all environments. And having a sound balance sheet allows us to do that.
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C
Is your outlook on rates shifted of late from I guess the market thinking we were closer to rate cuts than hikes and now wondering about hikes? Is that, is that your sort of gut feel as well?
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A
Well, I think, you know, we follow the market quite a bit. We think there's a lot of intelligence in the, in the market. And the market has moved now towards a more balance posture as it relates to rate hikes. You know, from my perspective, I think at a high level, the biggest concern I have about the move up in interest rates is just when you look at governments across the world, there's a high level of indebtedness. And the cost to fund that indebtedness is going up as rates go up in a period where people are running deficits to begin with. And so you've got this huge debt, you're adding to it through deficits and now the cost to fund it is going up. To me, that's probably the most problematic part of this bond move. But in terms of our expectations, the market pricing generally looks reasonable to us, which suggests we might not see the cut or cuts we thought we were going to get this year.
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C
And just touch on what your clients have done since the war started. For me, in a bit more detail, has it been a, a drastic shift away from risk into cash or marginal shift?
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We haven't seen any drastic client changes. I'd highlight a couple of things that we've seen occur. Number one, interestingly, client activity is actually picked up. So we see, we report our trading activity every couple of weeks. And if you follow those reports quickly or closely, you'd see that what was already a robust level of trading activity far above last year has only increased through, through the recent period. So that, that's been interesting. Second thing is we've seen some rotation within equities and the general theme, I would say is moving towards fundamentally oriented stocks. People have bought things like Nvidia and Microsoft, which our clients see as having strong fundamentals. You've seen flows move in there on the margin. We have seen, you know, some small uptick in client cash and, and we are seeing that, that take place, but we haven't seen a huge rotation out of stocks in any way. It is interesting though when you look at the past four or five years. The retail client, I think, has been one of the drivers of the rebounds of markets in each of the last major pullbacks. And so far we're seeing the retail client in this situation be a little more cautious than they were in the prior pullbacks. And that's been, that's, that's been interesting.
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C
That really is, that is striking. And they've been right most of the recent pullbacks. So congrats to the retail investor. Let's talk more broadly long term on digital assets. You mentioned that the top younger investors are more Predisposed to own things like crypto. Do you have a figure what portion of the 38 million client accounts you have do have exposure already to crypto?
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A
About 5% of our clients have exposure to crypto at Schwab. Now, we also know there's a lot of Schwab clients that hold spot crypto and they hold it at, you know, a Coinbase or Robinhood, because we actually today don't have spot crypto. We'll have it in the next several months, but we have not had it. And so our clients have participated in crypto in one of several ways. They've bought one of the ETF crypto ETFs, they've bought Bitcoin futures, they've bought closed end funds, or they've purchased an equity that closely tracks bitcoin. And when we look at that, it's about 5% of our clients that hold such an asset. And it's higher among our young clients and lower among our older clients. We are excited to launch spot crypto here in the next few months, and I think that will be engaging with some of our clients. We have a lot of clients that come to us and say, hey, hold my spot crypto. You know, at this other firm, I've got the rest of my assets at Schwab. I'd sure love to have them all together. And I've been looking forward to the day when we can say, well, bring it on over and keep it all in one place.
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C
Yeah, 5%'s a bit higher than I would have thought, actually for some of the crypto bulls like Dan Moorhead, our last episode, I refer people back to who kind of argue at 0.1% of people who have exposure. So far, so interesting that it's already as high as 5%. What about gold exposure?
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A
Yeah, gold we see that held in similar amounts. Interestingly, both bitcoin and gold, we've seen pretty significant outflows out of the past few weeks on a retail basis. So that's been an interesting development. And neither one has particularly performed like some kind of haven as we've gone through this geopolitical event. So that's been interesting. But yeah, our client. We certainly have clients that own gold and love gold, but it's not an overwhelming proportion of our clients.
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B
This episode is sponsored by the World Gold Council, the global experts on gold. They champion gold as a trusted strategic asset, provided market leading research to help investors understand gold's role and modernize how gold is owned, traded and used. Developing industry standards and market infrastructure. Learn more@goldhub.com in terms of different kind of exposures.
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C
You also recently bought a company called Forge and this allows you to offer shares in otherwise private companies. It's been a long term trend obviously of companies going ipoing later and getting bigger before they do. So talk to me a little bit about the level of demand you see for those sorts of privately held companies and is it much more offering them would be IPOs in those companies, equity exposure rather than private credit and other sorts of assets?
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A
Well, we're always fighting for the retail investor, for the retail investor to have every tool and every opportunity that institutions have to grow their wealth. And we one of the ways institutions have diversified their portfolios and added returns has been through the use of private investments. And what Forge allows us to do is to democratize access to private investments, direct private investments in companies and provides our clients with another way of accessing private investing. Now just like on the public side, our clients will be able to invest through a manager. If they want to access privates, whether it's private equity or private credit, they'll be able to invest via a passive fund that gives you broad exposure to private companies. And now with Forge, they'll be able to invest directly in the companies. A company like SpaceX or Kraken, if they're into crypto OpenAI, whatever the company may be, they'll be able to come on to Forge, find shares and invest. And we think that will democratize access to the asset class and over the long run help enhance our clients portfolios.
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C
I wanted to touch on some of your rivals. You actually mentioned both of them. I was going to bring up already Robinhood and Coinbase. Your market cap is about two and a half times that of Robinhood. Your assets are about 40 times. That was my quick maths on this before we started recording, but it's in that kind of ballpark. Why do you think they get such a big multiple?
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A
Well I think when you look at, at Robinhood they have a different set of economics than we do. We our business has always been about putting more money in our clients pockets. And so if you look at our revenue on a client asset, it's, it's quite low. 23 or 24 basis points, which means out of $100, you know, we earn 23 cents or something like that of, of revenue roughly. If you look at a business like Robin, you know, we're in the outcomes business, they're more in the transactions business. And so they make a lot of my money because they're you know, they're getting their clients to transact a lot and as a result their revenue on a client asset is probably seven, eight times ours. Out of $100, they're probably taking a $70 out of the client's pockets where again, we're taking something like a quarter 25 cents roughly. So it's just, it's very different and it stems from what our mission is, which is all about helping the client live their best financial life. And so we just have a different set of economics. They generate a lot of revenue off every one of their clients by getting them to transact. Whether it's gambling on what song Bad Bunny's playing or what the latest phases in prediction markets or buying lots of crypto, it's just a different business. We certainly see what they're offering to clients and we feel really good about what we offer. Our singular mission is to make clients better off in their financial life. And everything we do, from the thin revenue that we earn from clients to the way we run our expenses to the products we offer, is all there to try to make them as best off in their financial life as we can make them.
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C
Obviously, I'm sure Robinhood and Coinbase would argue their long term aims are similarly altruistic as your own towards their clients, albeit different business models. Of course. As you've touched on, I wanted to talk about M and A for Charles Schwab a little bit.
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B
Is any major M and A forge
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C
and others small bolt on deals notwithstanding, is any major M and A out of the question now?
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A
We've had five or six successful deals the last five years where we've bought companies with Ameritrade being the biggest, which brought to us a set of trading capabilities and scale that has really helped how we serve clients. Because what we love about that acquisition is now clients can come to us if they have some of their wealth that they want to trade with and some of their wealth that they want a broader perspective and help and guidance with. We can help them with all of it. And we can also bring our bank to both sets of clients to help them as needed with our banking capab. So we have engaged in M and A. It's been an important part of our history. It's made a big difference in what we can offer clients. It's made a big difference in our size and scale. And so I think we will absolutely keep our eyes open for things that can help our business and we'll be, you know, looking to acquire in the future if it makes Sense and it's something that could add value to our clients, including internationally.
- [34:55]
C
I asked just, you know, obviously Naveen just bought Schroeders here in the uk. It's a kind of arbitrage opportunity just on the valuation multiples. That is very significant between US investment firms and UK investment firms. Is that something you're looking at?
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A
I think we certainly have our eyes open internationally. It's a big market. More than half of the wealth sits outside the United States. We've got a presence, but our presence could be bigger. And yet at the same time our primary focus is here in the United States. We certainly are open minded as it relates to our international business, but our primary business is here in the US and we'll look to potentially add capabilities to serve all of our clients.
- [35:44]
C
As we start to wrap up. Rick, a few kind of big picture questions again. I mean you mentioned the outlook for G7 and developed world fiscal positions and so maybe you've alluded to it a little bit, but we've had a great run in markets for your clients. But in the business that Charles Schwab is in as well, whether it's post Covid or just the last two decades, really last 18 years or so since the financial crisis. We had Lloyd Blankfein on two episodes ago and he was talking about not having a serious reckoning therefore for 18 years.
- [36:23]
B
Is that a sentiment that you share,
- [36:25]
C
that you think there could be almost just purely by the passage of time, there could be a big reckoning in the months or years ahead.
- [36:34]
A
I think I've been in the markets for a long time and I can't remember a time being in the markets where people weren't worried about the next recession, the next pullback. And today is, is no different. I think it's really hard to make a call on, hey, we're going to have a huge pullback. Our message to our clients is have a plan, stick to that plan rebalance. It's about time in the market, not timing the market. And that's what drives long term financial success. The biggest concern I have related to markets really likely comes from inflation. I think in an inflationary world you'd have to see bond yields rise. And given the amount of indebtedness across the globe, I think that would be quite painful. Could compress valuations, make the federal, you know, the different central banks restrictive which ultimately could then lead to the double whammy of some inflation and some weakness in the global economy. So that's probably what I worry the most about. But, but I don't. There's nothing that I see that's imminent. I'll just. I'll share a story. I was out traveling and seeing clients, and I was in one of our branches, and I was speaking with a client who had sold equities when. When one of our presidents was elected, they were so distraught. They decided, I'm going to sell equities. And it had been. And this was back during the tariff issue, and it had been a while since they had sold the equities. Now the tariff issue was there. Equities were down. I can't remember what. They were down maybe 20% over a short period, time period. And the client was asking, hey, is now the time to get back in? Well, you know, the equities were 67% higher than they had sold them. Yes, they'd gotten a 20% pullback, but they were still 70% above had that. Had. They stayed on. So, you know, making these timing decisions is really difficult because you got to nail the time when to get out, and then you got to nail the time about when to get back in. I'm sure, you know, at some point in the coming years, there will be some more challenging economic times, and markets will struggle at some point, but I think it's really hard to call when that will be and to take any action in advance of it.
- [38:48]
C
Time in the markets versus timing the markets is a great line. Rick. My final question, and maybe you've already touched on a little bit of this for us, but as I've flagged before, we like to end by asking our guests, our successful guests, what their overall advice is for our listeners, both on the investment side and the career side or one or the other. And so that is my final question to you, Rick.
- [39:17]
A
Well, I'll touch on both. I think, as it relates to your career, I always say you got to grind to shine. I think you got to work hard. Hard work pays off. It will get noticed over time. And I. You know, that's. That's what I tell my kids. That's what I tell any young professional here at Schwab. If you want to stand out, it all starts with hard work on the market side. I think, you know, I come back to just be, you know, have a plan, be diversified, stick with that plan. We'll see how markets shape up. It is a challenging period that we're going through right now. It's quite interesting. I'm. I'm a chartered market technician, so I love to look at the. At the charts, and actually every major asset class is seems to be below its 200 day moving average and so you're in a period that is a little more choppy but but things can change and that's where the power diversification and having a plan really helps you stick to that plan and stick to markets because over the long run nothing pays off better than being a saving investor as it relates to your financial wealth.
- [40:22]
C
Rick, it's been an absolute pleasure to catch up with you today and grind to shine. I absolutely love as well. I strongly agree with that and thank you so much for joining us on the Master Investor Podcast.
- [40:36]
A
Well, thanks for having me on. It's been a real pleasure.
- [40:38]
B
The Master Investor Podcast is sponsored by Elseg Interactive Brokers, the World Gold Council, and BMY Investments. Please do remember the views expressed in this podcast are for general information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice, or a personal recommendation. More on that in the show. Notes this podcast is produced by Paradine Productions and Master Investor limited In association with Birdline Media. If you've enjoyed the show, please do subscribe on YouTube or click follow on your podcast platform and you'll be automatically notified each time a new episode drops.