“Once the brokerage house, rather than the bank, became the locus for American savings, that money would find its way into the stock market, because the broker was someone with a much higher tolerance for risk than the banker” — Ron Chernow
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In this quote, Ron Chernow is contrasting how banks and brokerage houses differently approached managing people’s savings and investments. He notes that historically, banks were more conservative places that took people’s deposits but did not encourage much risk-taking.
However, when brokerage houses became a major place for Americans to put their money aside, more of those savings would enter the stock market. This is because brokers generally have a “higher tolerance for risk” than bankers when allocating funds.
So in essence, Chernow is observing that brokerages steered savings towards the volatile but potentially lucrative stock market, while banks traditionally kept funds out of such risky territories. The quote examines how the rise of brokerages influenced growing investment in the stock sector.