We Study Billionaires - The Investor’s Podcast Network TIP319: Intrinsic Value Assessment of Charles Schwab w/ Arif Karim (Business Podcast)
Oct 18, 2020
Arif Karim, a senior investment analyst at Ensemble Capital Management and MIT graduate, dives into the intrinsic value of Charles Schwab. He discusses the brokerage's transformation and its innovative approach to wealth management. Karim highlights critical metrics in asset management, like AUM growth and NIM, while examining Schwab's unique competitive advantages against rivals like Robinhood. The conversation also touches on the impact of inflation on valuation, emphasizing the importance of understanding financial services for successful investing.
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Schwab's Founding
- Chuck Schwab founded Charles Schwab to democratize trading by lowering costs.
- Initially, trading was expensive due to manual processes and bundled research.
Vertical Integration
- Charles Schwab's success is partly due to their vertical integration strategy.
- They moved up the value chain, commoditizing lower-end services and scaling higher-value ones.
Horizontal Expansion
- Schwab horizontally expanded by targeting different customer segments.
- Starting with retail investors, they later included independent registered investment advisors (RIAs).