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CHARLES SCHWAB TELLS FOX BUSINESS NETWORK IT IS POSSIBLE WEÃ¢â‚¬â„¢LL SEE ANOTHER STOCK MARKET CRASH LIKE 1987 OR 2002
In a two-part broadcast exclusive with FOX Business NetworkÃ¢â‚¬â„¢s Dagen McDowell, Charles Schwab, Founder, Chairman and CEO of The Charles Schwab Corporation, tells FBN that with the 20th anniversary of Black Monday approaching, another crash could happen again. The 70-year old Schwab also talked about coming back as CEO, his biggest money mistake, and where heÃ¢â‚¬â„¢ll be in the next five years.
Below are the excerpts.
COURTESY OF FOX BUSINESS
ON WHETHER ANOTHER STOCK MARKET CRASH IS POSSIBLE:
Ã¢â‚¬Å“Absolutely. There will always be downturns in the market. My whole career actually has seen many, many more than just the two we mentioned. You have to have the fortitude to be a long-term investor and to hang onto good companies, good mutual funds and ride it out so to speak.Ã¢â‚¬Â
ON HIS OWN BIGGEST MONEY MISTAKE:
Ã¢â‚¬Å“Venture capital things IÃ¢â‚¬â„¢ve done where IÃ¢â‚¬â„¢ve lost 100% of investment. I knew they were high risk with high rewards and I lost all of it. IÃ¢â‚¬â„¢ve learned that even though a stock is down, it may go down even further. DonÃ¢â‚¬â„¢t just buy a stock because itÃ¢â‚¬â„¢s down. Buy it because itÃ¢â‚¬â„¢s a good company.Ã¢â‚¬Â
ON HIS COMEBACK AS CEO:
Ã¢â‚¬Å“The first half year was very difficult because we had to reorganize the company, become a more simplified company and take a lot of costs out. We had to reduce our prices to our customers that had gotten a little bit out of whack with the market. But now, the last three years weÃ¢â‚¬â„¢ve been just humming.Ã¢â‚¬Â
ON WHERE HEÃ¢â‚¬â„¢LL BE IN THE NEXT FIVE YEARS
Ã¢â‚¬Å“I see more of the same frankly. IÃ¢â‚¬â„¢ll probably be right in my role for at least that time period.Ã¢â‚¬Â
ON GETTING CHILDREN INVOLVED IN INVESTING:
Ã¢â‚¬Å“Ã¢â‚¬Â¦I like to use the example my daughter uses in terms of starting your children out with an allowance and forcing them to make decisions on their recourses when theyÃ¢â‚¬â„¢re 7 or 8 years of age. Let them buy the gum if thatÃ¢â‚¬â„¢s what they want to use their hard-earned savings on. Mommy and daddy shouldnÃ¢â‚¬â„¢t do that. Getting kids to think about the value of a dollar and be able to make those choices is important.Ã¢â‚¬Â
ON THE STOCK PRICE:
Ã¢â‚¬Å“We went public at $16.5 a share. That same stock because of stock splits probably would have been something like $200 a share had we not split so even after the stock market crashed and so forth weÃ¢â‚¬â„¢ve probably grown at a compounded rate of 20-25% over those 20 years so itÃ¢â‚¬â„¢s been a great growth period for us. The lesson is to find great companies and to stick with them even through down periods and crashes like 1987 or 2002 because they come back.Ã¢â‚¬Â
I have a more detailed transcript (working on getting full transcript). Please email (email to the left) if you would like a more detailed transcript.