Charles Schwab is interviewed by Lou Dobbs on Moneyline, CNN, tonight.
CNN at 11:30 PM tonight on the east coast. Schwab is interviewed towards the end of the show. The transcript is available at:
cnn.com
Incredibly, Charles Schwab said they had absolutely no problems these last few days, in spite of the high volume.
Schwab: "I think our satisfaction levels are very, very high. We experienced in the last three days, record numbers, .. We have a capacity now that is an unbelievable resource -- about 25,000 simultaneous transactions can occur.
DOBBS: So, you haven't had any problems?
SCHWAB: No problems, knock on wood.
(LAUGHTER)
Lou Dobbs: "We've talked about what you once described as the "May flies." Those people investing through their PC's and the market directly. How much of the volatility do you credit or blame on those investors, those "May flies?"
SCHWAB: Well, those are the very active traders. That always is occurring, one or two percent of the people who trade like crazy -- it's almost like an addiction to them. They usually are not the best long-term investors. They don't accumulate much money, but they have a lot of fun doing what they are doing. The other 95 percent, 98 percent investors know about it -- investing is for the longer term.
The "May flies" do have an added exacerbation point when the markets go down or go up.
Later Schwab says how few margin calls they had:
"I figured it was about 3/10 of one percent might have seen a margin call in the last week or so.
Then he contradicts himself by saying:
"The individual investor is pretty calm and just a few margin calls, maybe a few percent more than we normally would have."
Must have been a negative number before..
Here's the transcript:
Up next on MONEYLINE, the wild ride on Wall Street: how small investors are stomaching all those ups and downs. Charles Schwab will join me next here on MONEYLINE.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: In tonight's MONEYLINE Focus: the individual investor -- 120 million Americans have a stake in this Stock Market, through their 401(k)'s, mutual funds, or direct investment. Small investors have been the driving force behind this bull market, always stepping in to buy on the dips. But since July, they have seen about two trillion dollars erased from the market. The question is now, will they prop the market up once again?
Joining me now the man whose company manages $400 billion in assets for 5 million customers. Charles Schwab, he is the chairman and CEO of the company that bears his name. Good to have you with us.
CHARLES SCHWAB, CHMN. & CEO, CHARLES SCHWAB & CO.: Good evening Lou, nice to be with you.
DOBBS: We saw through Monday about an 1800 point runoff in the Dow. Now, after yesterday, we saw it move back up. What is going on in this market from your perspective?
SCHWAB: Well, it's a very turbulent period. We've had such a tremendous rise in the market over the last couple of years. It's only something you would expect -- to have a typical sell off, as we've had through August, and now probably into September. It's something that long-term investors expect to see. It presents opportunities for lots of people and you just got to remain calm.
DOBBS: Is there a change, in your judgment, in investor psychology here?
SCHWAB: Well, we just did a survey, recently, and 91 percent of the people indicated they were still confident of their long term goals and they were going to meet their long term investment goals. They were calm and were thinking about adding to their portfolios, even in this kind of turbulent period. Of course, we would say it's a fantastic time to be thinking about buying and adding those reserves you set aside.
DOBBS: And leverage in this market -- how big a part do you think it's playing in volatility margin levels -- margin calls right now, running about three to four times the normal period? What do you make of that?
SCHWAB: Well, at Schwab, we are primarily dealing with the individual investor. We have about seven percent of our accounts would have margin accounts and about a very small fraction -- I figured it was about 3/10 of one percent might have seen a margin call in the last week or so. A very small number. What you are seeing in terms of margin calls are some of the big, large, hedge funds, which we don't really participate with. You read about in the headlines, how they lost a lot of money, et cetera. For the most part, the individual investor is pretty calm and just a few margin calls, maybe a few percent more than we normally would have.
DOBBS: You're the largest on-line brokerage. Have you experienced any problems with all of this volume that we've had over the last few days? Any missed opportunities from your perspective?
SCHWAB: Well, we're very pleased to say that we've had record volumes in terms of the customers transactions and I think our satisfaction levels are very, very high. We experienced in the last three days, record numbers, in terms of online transactions, were well into the 150,000 to 200,000 transactions. We have a capacity now that is an unbelievable resource -- about 25,000 simultaneous transactions can occur.
DOBBS: So, you haven't had any problems?
SCHWAB: No problems, knock on wood.
(LAUGHTER)
DOBBS: We've talked about what you once described as the "May flies." Those people investing through their PC's and the market directly. How much of the volatility do you credit or blame on those investors, those "May flies?"
SCHWAB: Well, those are the very active traders. That always is occurring, one or two percent of the people who trade like crazy -- it's almost like an addiction to them. They usually are not the best long-term investors. They don't accumulate much money, but they have a lot of fun doing what they are doing. The other 95 percent, 98 percent investors know about it -- investing is for the longer term. The "May flies" do have an added exacerbation point when the markets go down or go up.
DOBBS: Give us your judgment, as we wrap up here as to what investors should be looking for, preparing for over the next few months, in this market.
SCHWAB: Well, I think two things. One -- is a very good time right know to think about your tax planning. A good time to maybe sell a few things that are down, exchange a few funds for some other kinds of funds. Secondly, over the next 60 days, I would add your account using about a 1/3 of your excess money, each of the next 60 days -- about every 20 days add another 1/3.
DOBBS: Charles Schwab, thanks for being with us here on MONEYLINE.
|
