In a recent surprise encounter, BTIG’s Julian Emanuel met Charles Schwab. It took just 20 minutes of chatting for the finance legend to spur a bold call from the Wall Street strategist: A 25% gain for stocks in 2020.

It’s not his base case, but BTIG’s chief equity and derivatives strategist says it’s possible that the S&P 500 Index surges to 3,950 next year, driven in part by the fee war that’s swept the asset management industry. It was just after Charles Schwab Corp. cut commissions to zero when Emanuel and the brokerage’s founder met.

“His enthusiasm over the whole idea that this was another step in the democratization of markets for the public, it was so profound and it really hit me,” Emanuel said in an interview. “To me, his belief in the benefits of markets and investing seem to be stronger than ever. That really focused our attention on the potential.”

The logic goes like this. For much of the past decade’s bull market, investors have remained under-invested, preferring the safety of cash over the risk of equities. But history shows that typically near the end of cycles, “the public investor falls in love” with risk assets, often “resulting in a parabolic move higher,” Emanuel wrote to clients this week. To him, zero-fee trading could be the spark that ignites the rush even after the 25% gain so far this year.

Charles Schwab said it would cut commissions on trades for stocks, options, and exchange-traded funds to zero in October, sending shares of its competitors spiraling. TD Ameritrade Holding Corp. did too the same day (although Schwab later agreed to buy the broker), and E*Trade Financial Corp. made the move the day after.

In the month that followed, clients opened 142,000 new brokerage accounts at Schwab, a 31% jump from the prior period.

“If you’re going to have more account openings, those people aren’t buying bond funds,” Emanuel said by phone. “People are starting to pay incrementally more attention. The move to zero fee online trading is one of those things that makes is so incredibly easy.”

His discussion with Chuck Schwab reminded Emanuel of rule changes in the past that weren’t expected to have outsize effects on stocks, but did. Take the turn of the century, when a move by the U.S. Securities and Exchange Commission that ordered stock prices be reported in decimals instead of fractions led to higher trading volumes. Or in 2007, when the regulator removed the so-called Uptick Rule, introducing new market dynamics, he said.

To Ryan Nauman, a market strategist at Informa Financial Intelligence’s Zephyr, the connection makes sense. But a 25% gain from the S&P 500’s current levels seems a bit lofty considering risks including U.S.-China trade war, a presidential election and geopolitical tensions abroad will likely persist.

“If there is less cost, trading should pick up and you’d assume trading to the upside,” Nauman said by phone. “That definitely could help drive markets. I’m not quite that optimistic though. There’s just too many headlines out there.”

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