1 May 1975: May Day: fixed commissions die and Vanguard is born
On May 1, 1975 the SEC ended fixed brokerage commissions, a day Wall Street called May Day. Firms like Charles Schwab seized the chance to offer discount trading. The same day John Bogle founded Vanguard, which launched the first index fund for ordinary investors a year later, mocked at the time as Bogle's folly. Together they started a decades-long collapse in the cost of investing.
The lesson: Costs compound just like returns; cutting fees is one of the few sure ways to earn more.
What it meant for investors
$1,000 in Charles Schwab at the start of 2000 → $2,500 today, vs $4,626 in the S&P 500.
We start the clock at the start of 2000, the first year in our price data after the event. That is 2.5 times the money, but $2,126 less than a plain index fund made over the same years.
What Charles Schwab teaches: Knowing how a company actually makes money matters; a broker can be mainly a bet on interest rates, not on trading activity.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2000 | $38.00 | $2,500 | $4,626 |
| 2003 | $11.00 | $8,636 | $7,727 |
| 2005 | $12.00 | $7,917 | $5,763 |
green = beat the S&P 500 · red = lost money
What if you bought Charles Schwab? Every starting year and the full story →
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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