Marketing to the Investor Class: Talking with Chuck

For newcomers to the business of marketing investment services and products, this interview with Charles Schwab from Dow Jones' Opinion Journal offers useful background.

Schwab started in the brokerage business in 1971. Four years later, the Securities Exchange Act of 1975 did away with fixed brokerage commissions. Chuck took the discount-brokerage ball and ran with it, all the way to the internet.

Schwab favors the Bush tax cuts for capital gains and dividends and hopes they endure:

What would be the stock market response to repealing them? "Oh, I think it would probably cost the market 5% to 10%," he predicts. "That may not happen on a single day. But it will certainly suppress prices. And the market is already anticipating these higher tax rates," he assures me, which means stock prices are already being suppressed by tax uncertainty.

"I would say we're probably in the neighborhood of $10 trillion of unrealized capital gains" Mr. Schwab says of the present economic situation. "If you put a 100% tax on it, of course, the government's going to get none of that. If you're at zero, you would get none. With the 15% rate for capital gains, we're probably at the optimum rate.