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Why I’m Bullish on Charles Schwab

Why I’m Bullish on Charles Schwab

Posted On December 3, 2019 2:00 pm
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Charles Schwab (SCHW) made headlines twice in the past two months with two bold moves that are changing the landscape of the brokerage business and positioning it to dominate the money management industry for years to come.

The first bold move came in early October when Schwab effectively dropped commission rates on all trades to zero.  Initially, shares of Schwab dropped some 15% on the news.  But they recouped those losses within the month as investors came to appreciate that not only did the move allow SCHW to compete more effectively with a new platform such as Robinhood and SoFi which offer free trading, but the reality is trading commissions only accounts for 10% of SCHW’s revenue — even less of its profits.

Competitors such as TD Ameritrade (AMTD) and E*Trade (ETFC), which quickly matched the zero commission offer, were hit even harder as their shares fell over 25% and had only regained about half of that in the following weeks.

The second bombshell … Continue reading at StockNews.com

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About author

Steve Smith
Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.

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