The Reading Room

Invested

Charles Schwab

Published: 2019

Invested, changing forever the way Americans invest, is a recount of the revolutionary journey of an entrepreneur and his team, to become the largest discount broker in America.
The book is more like a freewheeling discussion, with Mr Schwab pouring out his heart.  The book starts with Mr Schwab’s journey as of being raised in a middle-class family, with a tight fist and frugality at core.  His life changed when his father explained to him the stock tables in the local newspaper, and how he was stuck to the idea of building a career/wealth through investing in the stock market.
Why was wealth creation concentrated in the hands of few? This thought had a strong impact on Mr Schwab, and was the driving force to create, what we know today as Charles Schwab and company.  This thought of ‘financial freedom for all’ grew stronger through his college and business school days in the 1960s, and he kept on thinking- why is investing exclusive to a few on Wall Street?

In the pre-internet days of 1960’s, Mr Schwab had a humble beginning and started a stock market newsletter and later added brokerage services.  In 1973, he founded Charles Schwab and Company and stuck to his principle of to open investing to the American middle class, by offering stock trading at a fraction of the prices charged by the established bank-backed brokers.  It was a slow start, until in 1975, when the Securities and Exchange Commission (SEC) deregulated the fees charged by brokers, marking the inflection point in the journey of Charles Schwab and company.

The company stood tests of time on various instances from the crash of 1987, 1999-2000 dot com bubble, 9/11, and the global financial crisis of 2008-2009.  The most noteworthy being the 1987 crash with his company having gone public just two months before Black Monday and if not for the IPO, the company wouldn’t have made it.

The author shares how in 1981 he digressed from his entrepreneurial journey and agreed to sell his company to the Bank of America. He was offered the position of a CEO and a handsome salary, and he sold his company, only to realize that he even lost his freedom and the principles on which he started Charles Schwab and company.  He was fortunate to re-gain control of his company and vowed to never repeat the mistake.

Apart from the memoirs of building Charles Schwab and company, the book also shares that Mr Schwab has dyslexia, which made his reading and studying very difficult.  Yet, he made it through Stanford.  He also sites John Chambers of Cisco (CSCO), Craig McCaw who pioneered wireless telephone services and Richard Branson of Virgin Galactic wo have been successful despite the disability.  Mr. Schwab said the dyslexia taught him to think outside the box and the proof of the pudding is the largest discount broker by number of customers and assets under management.

While the book tells us a lot about Charles Schwab and Company and its founder, what caught my attention were the values that guided Mr Schwab and how he stuck by them.  Also, though there is no alternative to hard work, its important to be at the right place at the right time.

Ritika Behera

December 2021