The Curious Case of Charles Schwab

One of the safest banks in America is getting punished by a popular delusion ... ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ April 15, 2023 |  [Sign Up]( The Curious Case of Charles Schwab Dear , We write about popular delusions. One of the most recent clouds of paranoia surrounds the enormously successful DIY brokerage Charles Schwab. Schwab’s own marketing says they offer a “modern approach to investing” and offer “a wide range of products and services, including brokerage and retirement accounts, ETFs and online trading.” The model has been successful. During the pandemic, as folks were sitting at home trading on their own, Schwab stock rose from $31 to $95—a 206% increase in about 18 months. Individual retail investors were not only buying Charles Schwab common stock, they were also using the Schwab platform to trade during the cash infusion "stimmy-gimmies" the market received during the lockdown period of the Pandemic. Two weeks ago the Schwab stock price fell off a cliff. But nothing had changed at the bank. Nothing had changed with the trading platform. What did change—and has been changing—was the Fed’s dramatic effort to fight inflation by raising interest rates at an historic pace. This increased the attractive returns "money markets" will pay. Individual investors who’d been trading on the Schwab platform… and those who’d given Schwab their money to be managed in one of the Schwab funds… started pulling their money out, seeking higher returns in money market accounts. Big institutional bankers took notice. They started dumping Schwab stock. The stock dropped nearly 40% in a matter of days. But that’s what makes this case “curious.” Schwab has a $90 billion market cap. But it was—is—being treated like a regional bank, subject to volatile rates, and investors chasing higher returns elsewhere. Schwab is a victim of the digital era of crowds. For that reason, we offered a buy recommendation on Schwab this week in The Essential Investor. But the story goes deeper than that. Banks are under stress right now. Some unfairly. Which creates buying opportunities we anticipate will be profitable. The banking crisis is also indicative of the boom and bust cycle we’ve been witnessing in the credit cycle since the Flash Crash of 1987. When Alan Greenspan, then chair of the Federal Reserve, drastically cut rates to save Wall Street and its banks, he set in motion a pattern we’ve seen repeated during every crisis since.  On Monday, April 17 @ 3pm, during [Wealth365]( the largest all-online financial summit in the world, we’re going to discuss the credit cycle and what danger still persists… not just to the banking system… but to the entire global financial structure that is dependent on the US dollar for its lifeblood. I urge you to join the event. New insights always arise when we interact in a live symposium. We’ll analyze the banking crisis. We’ll discuss the risks to your money. We’ll suggest ways you can avoid and not worry about the crisis at all! The French have a saying I like: “plus ca change, plus c’est le meme chose” – the more things change, the more they stay the same. When we analyze credit booms and busts, as we have been doing for the last 30 years, the names, places and innovations change. The results are eerily similar. Let’s discuss and plot a course to help you manage your money through this cycle. Join me on Monday, April 17 at 3pm EST. You can register for Wealth 365, right [here]( Follow your own bliss, Addison Wiggin, The Wiggin Sessions P.S. When we were investigating the “contagion index” published by the Treasury Department’s Office of Financial Research, Charles Schwab had a scary score of “1”... meaning it didn’t register as a threat at all. Still, the stock has gotten whacked by popular delusion and high frequency trading. That fact doesn’t really matter to you unless you own Schwab stock or have an account with them. But if you’re not personally invested, the example of what Schwab represents since mid-March is a case study in how uncertainty in the markets, in the banking system, can get out of hand quickly. We’re not trying to alarm you any more than Janet Yellen or Jerome Powell are trying to steady your nerves. It’s just a curious case… and worth all of our attention. [Join me at Wealth 365 on Monday, April 17 at 3pm](. Cheers. The Daily Missive from The Wiggin Sessions is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to The Wiggin Sessions delivering daily email issues and advertisements. To end your The Daily Missive from The Wiggin Sessions e-mail subscription and associated external offers sent from The Daily Missive from The Wiggin Sessions, feel free to [click here.]( Please read our [Privacy Statement.]( For any further comments or concerns please email us at feedback@wigginsessions.com. If you are having trouble receiving your The Wiggin Sessions subscription, you can ensure its arrival in your mailbox by [whitelisting The Wiggin Sessions.]( © 2023 The Wiggin Sessions 808 Saint Paul Street, Baltimore MD 21202. 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