Chuck Schwab: We’ll Go Over Cliff, but Let’s Move On

In a standing room only conversation that finished day one of the Schwab Impact 2012 conference in Chicago on Wednesday, Maria Bartiromo sat down with Chuck Schwab, Scott Nuttall and George Roberts of KKR. The three men took questions from Bartiromo and the audience of advisors, traded stories of their storied careers and discussed the investment opportunities they see even in these volatile times.

Schwab was clearly the star, and the founder and chairman of Charles Schwab & Co. spoke in his trademark blunt way about the role of alternative investments in his own portfolio, the likelihood that we will go over the fiscal cliff and why he’s ready to write a “bigger check” in taxes to help address the nation’s fiscal woes.

First, Schwab revealed that in his personal portfolio, he holds 15% to 20% in alternative investments, and that he likes the opportunities presented by private credit investment vehicles (which KKR offers) particularly now that the banks are not providing much in the way of financing to businesses.

When Bartiromo asked the panel how the audience of advisors can help get investors back into the markets, Schwab said the key was that “you have to have stability.” Having faced such serious “cyclical events over the past 10 years,” driven partly by “the Wall Street firms getting so over-leveraged,” Schwab said that one of the benefits of the Dodd-Frank Act was that it might well help provide “some stability” to the markets.

As for the coming fiscal cliff, Schwab said he believed there was a “high probability” that we’d go over the cliff, with resolution not coming until some time in the spring, but he made it clear that he personally would have no problem if that resolution included higher taxes “for people like me.”