Bernard Beal, CEO, M.R. Beal & Co.

In 1988, Bernard Beal put forward a rather outlandish proposal to his wife, Valerie Lancaster-Beal. “Hey, look,” Beal recalls saying. “I’m thinking that maybe we take this money and go buy a farm.” Beal knew his wife was willing to say goodbye to Wall Street. The couple had achieved great success early in their careers—he as a senior vice president at brokerage house E.F. Hutton, and she as an investment banker with Drexel Burnham. They worked long, hard hours; lived on their salaries; and put their lavish bonuses in the bank. By the time they were in their early 30s, they had socked away enough money to escape to a more leisurely life. That year, as recession and crisis swept the world of finance, the couple was forced to do some soul-searching: stay in New York or leave?

Beal was serious about the farm, and Lancaster-Beal actually liked the idea. It wasn’t long before the two were touring with a real estate agent through the hilly countryside of northern Virginia’s horse country looking at equestrian farms. The couple saw several estates they liked, but when they returned to New York, Beal presented his wife with another option: a business plan he had written some eight years earlier while studying for his M.B.A. at Stanford University.

Reading the outline for the first time, Lancaster-Beal discovered that her husband had always dreamed of using his talents to start his own firm. The business plan was his wish list, a blueprint that outlined a small investment banking operation that specialized as an underwriter of municipal and corporate bonds as well as serving as an investment advisory firm. In the business plan Beal had hidden in a drawer for close to a decade, the couple found an answer to their dilemma. “We will get to that

(Continued on next page)

farm eventually,” Lancaster-Beal told him, explaining that between the two of them, they had the talent, the resources, and the potential clients to build a great firm. “It was our time,” she says. “I said: ‘Let’s go for it.’”

Some 23 years later, the firm Beal founded at the urging of his wife is touted as the nation’s oldest continuously operating minority-owned investment bank. M.R. Beal & Co. (No. 5 in taxable securities with $1.6 billion in lead issues and No. 3 in tax-exempt securities with $2.2 billion in lead issues on the be investment banks list) consistently ranks among the top 20 firms conducting municipal debt transactions, and among the top 100 firms guiding corporate equity and corporate debt issuances, according to Thomson Reuters.

As chief executive, Beal hasn’t let the recent recession and slow-recovering economy hinder business. The company was engaged in $40.2 billion of public financing in 2008, followed by $45.4 billion in bond issuances in 2009. In 2010, the company’s senior managed and co-lead deals totaled more than $62 billion. A large part of what made 2010 a banner year was M.R. Beal’s participation as a so-called senior manager and sole book-runner in a $1.3 billion bond issuance for the State of New York. The deal made history as the largest New York State bond transaction conducted by a minority-owned firm. Also in 2010, M.R. Beal took part in major stock and corporate bond offerings for the likes of CitiGroup, General Motors, and Bank of America, underwriting more than $125 million of offerings as each of those companies raised money in the capital markets to pay back the U.S. Treasury for Troubled Asset Relief Program monies they received during the financial crisis. As a result of its financial performance, consistent growth, and innovation in the face of financial industry turmoil, Black Enterprise has chosen M.R. Beal & Co. to be our 2011 Financial Services Company of the Year.

(Continued on next page)

Just as Beal outlined in his business plan many years ago, M.R. Beal & Co. has three core businesses:

• Broker-dealer for investors who want to buy or sell stocks or bonds
• Assist corporations in issuing stock and in borrowing money when it structures corporate bond issues
• Municipal bond underwriting

M.R. Beal is most widely known for its third line of business. “Municipal bonds are really borrowings done by state and local governments,” explains Beal. “Say the City of New York needs to borrow $640 million for upgrades to the water system, they would come to M.R. Beal & Co., and we would arrange for that loan. We would find investors who are willing to lend the city the $640 million and we’d go out to each of those investors and we’d negotiate rates and terms that they were willing to make the loan for. We would negotiate with the City of New York so that they could borrow the money, how long they were going to borrow it, and then execute the loan very much the way you go out and get a single-family mortgage for your house. That is exactly what we do and we get a very small fee for doing that.”

THE BIG DEAL
As Beal’s firm helps cities, counties, and states across the country borrow money to fund public works and other projects, those “small fees” add up. What sets M.R. Beal apart from the scads of other firms in the same business, says Beal, is that “we are really good at negotiating the terms of the loan. So the client gets the lowest borrowing costs.”

(Continued on next page)

That’s something Paul T. Williams Jr., president of the Dormitory Authority of the State New York, can attest to. DASNY is a state entity that provides financing and construction for public and private universities, medical facilities, and other state-related institutions. It is one of the nation’s largest issuers of municipal bonds. M.R. Beal’s $1.3 billion history-making bond deal in 2010 was a DASNY issue. The personal income tax revenue bonds, or PIT bonds, were used to finance State University of New York educational facilities, as well as community colleges, City University of New York facilities, libraries, and other economic development projects. Williams, who chaired a taskforce in 2008 to better understand why minority firms weren’t leading more bond transactions, was more than pleased with the deal’s outcome.

The transaction was noteworthy not only for its size; M.R. Beal managed to orchestrate the lowest-cost PIT bond financing done by the state of New York. It made sense to choose M.R. Beal to lead the issue, says Williams, because Beal had a terrific track record. “Bernard makes it a point to be sensitive to broader state policies,” Williams notes. “That can be helpful. We need to know how transactions we’re considering might impact policy. Bernard tends to bring a more global view to his business so it’s not exclusively, ‘How do we get this one deal done?’ Also, he has a record with us of having really good market intelligence.”

AN EDUCATION
Beal has always been known for his intelligence. Born in 1954, he grew up in the Morrisania neighborhood in the South Bronx, New York. “I was the No. 1 kid in almost every subject in my school—definitely in math,” Beal laughs. “And I remember when I won the seventh-grade math prize, I went up on stage to get the award, and here was my acceptance speech: ‘You might as well put my name on it in the eighth grade and ninth grade, because I’m going to win those too. This is ridiculous—we shouldn’t even have a competition.’”

(Continued on next page)

Beal’s smarts led a teacher to recommend him for A Better Chance, an organization that places students from low-income neighborhoods into more challenging private and public schools. To be considered for the program, Beal had to pass a 100-question New York City Regents exam with a score of 66 or higher. So sure of himself, Beal answered only 66 of those questions, leaving the remaining 34 blank. When the teacher suggested he answer the remaining questions, the young Beal replied, “I finished it.” When the teacher explained that just one incorrect answer would eliminate him from participating in the program, Beal’s response was, “I didn’t get one wrong.” The teacher demanded he sit down and finish the exam, so Beal sat at the desk with hands folded until time was up—not bothering to finish the exam. He passed.

The next year, Beal began classes at the prestigious Wooster School in Danbury, Connecticut. For a brief time at Wooster, Beal was humbled to learn that he was no longer the brightest kid in the class. But with the help of a kind teacher who helped him after hours, Beal quickly rose to the challenge. It wasn’t long before the same intellectual haughtiness he displayed in the Bronx fueled him through Carleton College, Stanford University’s M.B.A. program, and onto Wall Street as a young banker at E.F. Hutton. “You know, I’d have to say that same kind of arrogance, that same kind of hunger, is inside of me. It’s still there,” Beal confesses.

THE EXPANSION TEAM
Beal’s command of facts and figures masked one of his great weaknesses. While he has always been a great pitchman, able to woo clients with his social ease, he will readily admit that he’s not the best manager of people—something he didn’t discover until he started the firm. “I really wanted a business plan where everybody just worked, knew what to do, and did it—and there was no hierarchy,” says Beal. “I just didn’t want the hierarchical structure. But as human beings we are herd animals who require a leader. If there isn’t a leader, then the herd stampedes or scatters.”

(Continued on next page)

To keep his herd of now 50 employees from wandering, Beal hired Stanley Grayson in 2002. Grayson, a former deputy mayor for finance and economic development of New York City under Mayor Ed Koch, serves as vice chairman and chief operating officer of M.R. Beal. What does that title mean in the firm’s day-to-day reality? “Bernard and I complement each other very well. In Bernard, you have true brilliance of mind. I think part of my job is to take a lot of things off his plate to allow him to focus on strategic direction,” says Grayson, whose managerial know-how has helped the firm court a new, smart team of bankers and sales representatives who were downsized from larger Wall Street firms in recent years.

Grayson’s presence has allowed Beal and his wife, who serves as the firm’s senior vice president and director of strategic planning, to focus on expanding and diversifying the business. One of the firm’s most notable recent moves came last November when it announced a strategic alliance with national brokerage firm TD Ameritrade. The larger brokerage house will offer newly issued municipal bonds underwritten by M.R. Beal, meaning that retail investors, and independent registered investment advisers on TD Ameritrade’s platform, will have access to the hundreds of municipal bond issues M.R. Beal brings to market each year.

Beal is so focused on the continual building of his firm that he hasn’t given much thought to the horse farm he and Lancaster-Beal dreamed of years ago. The Beals are considering a succession plan that would include a place for their son, Michael, should he be interested in joining the firm in the future. Michael Beal, 27, is finishing his first year of M.B.A. studies at Harvard Business School after working in Morgan Stanley’s mergers and acquisitions shop and completing a stint with a West Coast private equity firm. The Beals also have a 23-year-old daughter, Erica, who teaches third grade at a charter school in Harlem. Any plans the Beals have for a life of leisure are a long way off. “We’re really focused on making M.R. Beal the best it can be,” says Lancaster-Beal. “We’re not ready for the farm yet.”

Douglas Coe Managing Partner and Chief Investment Strategist Investment Banking/
Capital Markets, Moody Reid Financial Advisors Kansas City, MO
“We’ve just entered into the second phase of one of the strongest bull markets in U.S. history. Interest rates will remain low. Stocks still remain the dominant asset class of choice for wise investors who are seeking to keep pace with inflation. Again, U.S. stocks are still undervalued.”

Jacquette Timmons President and CEOSterling Investment Management | New York
“It’s important to remember that any market rally or boom is a reflection of either our collective fear or optimism. So, yes, the current rally will continue provided the United States government doesn’t shut down or become engaged in another war, oil prices stabilize, and private industry job growth continues unabated.”

Arnett Lanse Waters Principal
A.L. Waters Capital L.L.C. | Braintree, MA
“Oil will trade above $150 per barrel. Gold will trade above $1,600 an ounce. Unrest in the Middle East will spread. Unrest will take hold in China, too. U.S. corporate earnings will decline.”

Larry Seruma Managing Principal
Nile Capital Management L.L.C. | New York
“We at Nile Capital believe that the market rally is going to continue over the next year. In the next 12 months we do not see the Federal Reserve raising rates, which means the cost of capital will remain low, and earnings will continue to surprise to the upside. Unemployment will also continue to fall, and that will increase consumption and encourage growth. In fact, we have already seen capital flows returning from abroad as investors’ allocations to U.S. markets continue to increase. In our view the biggest risk remains a less accommodative stance by the Fed; however, we believe that such a policy is unlikely in the short term.”

Joe A. Gilbert CFA, Portfolio Manager
Integrity Asset Management L.L.C. | Cleveland
“I’m still positive on the market at current valuations. Earnings will grow because of growing sales. We are in a maturing bull market, which requires investors to be more selective. But opportunities remain. Economic expansions typically last seven years and we are only in the second year of this expansion. There is continued positive business momentum and the economy is still operating substantially below potential output levels. Bull markets historically die on optimism and grow on skepticism, and there is plenty of skepticism surrounding this market now.”

Ivory Johnson Director of Financial Planning
The Scarborough Capital Management | Annapolis, MD
“In response to the financial crisis of 2008, the Federal Reserve electronically created $2 trillion of new money that wasn’t backed by anything of value, and purchased Treasury bonds from the banks. The Fed presumed that once the large banks received this money, they would lend the additional currency to consumers so they could buy more goods and services, thereby boosting economic activity. The banks instead used the money to buy stocks. Once quantitative easing and the stimulus handouts to the states end in June, the rally may be tested.”

Lee Baker CFP
Apex Financial Services Inc. | Tucker, GA
“I expect the market rally to continue over the next year for a number of reasons. First, the Federal Reserve will continue to do everything in its power to create fertile ground for the market to adhere to its upward trend. In addition, we will see dollars that had been sitting on the sideline last year continue getting into the game. Currently, the bond market is an unappealing place to put new money due to inflation fears. As a result, that leaves stocks as the most likely landing place for those dollars. The U.S.’s position in the global economy isn’t what it used to be, but all paths still lead to, or perhaps through, America. The ongoing global economic expansion will ultimately benefit our domestic markets. One cautionary note: Sustained upheaval in the oil-producing regions could eventually put the brakes on consumer spending. This would be a result of higher prices at the pump and the grocery store.”

J. Michael Salley Registered Principal
Salley Wealth Advisors Group L.L.C. | Summerville, SC
“Several important factors point to higher stock market valuations: We are fully entrenched in an economic recovery in the U.S. Gone are the sentiments and opinions about the possibility of a double-dip recession. The health of corporate America is very strong and will continue to improve. The majority of companies are reporting earnings above Wall Street’s estimates. I believe this trend of improving earnings will persist. Consumer confidence and sentiment are growing stronger. I recently read in a news article that this improvement is more evident in the African American community, based on several survey results. Lastly, there are trillions of dollars still sitting on the sidelines in a near-zero interest rate environment. These assets will soon be forced to move into equities as the picture continues to brighten.”

The teenager came home one evening sporting a shiny new Rolex watch a bond trader had given him as a holiday present.

“I made him give the watch back,” says the older McMillan. “I didn’t want him to focus on the trappings and materialism of Wall Street.” Recalling one of the most heated confrontations he says he’s ever had with his son, “I told him, ‘You’re not there to get watches; you’re there to learn. If you stay focused on what’s important, you can buy your own Rolex someday.’”

Sixteen years later, Lamont McMillan Jr. remembers his father’s lesson with a fond smile. Today, at 30, Lamont is a successful Wall Street bond trader managing a $3.5 billion portfolio of seven- and 10-year U.S. Treasury bonds, and is one of the youngest directors at the global financial services company Deutsche Bank. Lamont is a key member of a team of 10 traders at Deutsche Bank, which in 2010 was ranked No. 1 in U.S. fixed-income in an annual client study by Greenwich Associates, a Connecticut research firm.

Lamont McMillan Jr.’s tale is a rare one, in which brains, determination, and carefully cultivated social connections helped him climb in a world still largely closed to people of color. Indeed, less than 3% of executives in the financial industry are black, according to a 2010 U.S. Senate survey of the nation’s 500 leading global companies. McMillan credits his achievement to a close circle of mentors, advocates, and family members who helped mold and shape him. “I was afforded an opportunity at a really young age, to come in, sit with those guys, to learn about the markets, and to come up with a framework for trading,” says McMillan. “And, to the extent that I was successful, they were willing to give me more opportunities.”

FRIENDS & FAMILY PLAN
Finance is in Lamont’s genes. His father, Glenn, works for the Financial Industry Regulatory Authority (FINRA), the financial industry’s self-regulatory entity, and his mother is a former bank administrator. But it was Lamont’s uncle Jerry McMillan who introduced him to the Government Bond Trading Desk when he was just 13. Jerry McMillan was a supervisor of the Treasury Auction team at Goldman Sachs in the early ’90s and took his young nephew to work one day.

Among the first people Lamont met at the global investment banking and securities firm was Paul Jacobson, a brash Goldman partner who headed the government securities trading desk. Jacobson shook Lamont’s hand and passed him a copy of the “Credit Markets” page of The New York Times. “He told me to read it, then take a yellow marker and highlight everything I didn’t understand,” recalls Lamont. “When I was done, the whole page was yellow.” The exercise led to the first of many homework assignments from Jacobson: “He told me to go home and write a report on the Federal Reserve.”

A year later, in 1996, when Jacobson moved to Deutsche Bank to become managing director in fixed-income securities, he took Lamont along as one of several minority students in an after-school mentoring program. Jacobson created the unofficial internship and initially funded it out of his own pocket. “It was very informal,” says Jacobson, who explains the program consisted of simply allowing the interns to spend time on the trading floor. Traders would help interns with their homework and give them assignments to complete. They let the interns peer over their shoulders as they executed trades. The interns fetched coffee too. “We were tough on them. We hazed them and treated them the same way we did business school graduates,” says Jacobson who today is CEO of Thorne Research Inc, a dietary supplement manufacturer.

Bond traders aren’t known for being a particularly coddling bunch. In fact, they have a reputation for being short-tempered, highly competitive, and filled with super-sized swagger. The traders at Deutsche Bank were no different. Most of them were more than twice Lamont’s age, and almost none of them were black. Still, they became Lamont’s main social circle during his teen years as he proved to be a standout among the interns.

“Lamont was very studious and really serious and laser-focused,” recalls Scott Gewirtz, one of the traders Lamont bonded with early on who now serves as a managing director in government bond trading at Nomura Bank in New York. “He fit in with us. He just showed a great interest and ability to grasp complex trading concepts.”

THE WORKING MAN
By the time Lamont was in his mid-teens and enrolled at Brooklyn Technical High School, one of New York’s top public secondary schools, it was clear he had a facility with numbers. Lamont had athletic talents too. He played youth-league football through eighth grade, but decided to forego sports in high school to focus on finance. And all through school, Lamont stuck to a single routine. He took a roughly 45-minute subway ride from Harlem to Brooklyn in the morning. On the way home, he stopped at Deutsche Bank for a few hours. Once he was home, he’d finish his school assignments and delve into a few additional hours of Wall Street homework. At night, he’d study how markets worked and read economics textbooks. During his summers, he’d spend the whole day at Deutsche Bank, hanging out with the traders, peppering them with questions. While on the trading floor, Lamont would take notes.

He began to see how the math he learned at school applied to the trading environment. “A lot of times, kids at school didn’t understand why we were doing a certain math problem, or why calculus was useful, or why we learn linear equations,” says Lamont. “But coming onto the trading desk, I saw firsthand where those things could be used. To be a good trader these were the concepts I had to master.”

A bond is essentially an I.O.U. that a company or institution, such as the U.S. Treasury, issues when it wants to borrow money. When an investor buys a bond, the bond issuer promises the investor two things: payment by a specified future date and interest payments to be delivered in the meantime. Traders are essentially professional investors who buy and sell bonds on behalf of their financial institution and their clients. Various economic factors, international events, and news can affect bond prices in the marketplace. For instance, when interest rates rise, bond prices fall. When interest rates fall, bond prices go up. Amid all the rises and dips, a trader’s job is to anticipate what’s likely to happen and help maximize returns for clients—and of course minimize losses.
“That’s one of the challenges of trading,” Lamont explains. “It’s our job to understand the risks that are in the portfolio. You can never immunize against every single risk, but it’s important to know how each development is going to affect the market and affect your position.”

Though the pressure on traders is great, no one should feel sorry for them; they are well-compensated for what they do. The average bond trader in New York City earns a base salary of about $150,000, according to job search website Indeed.com. Their annual bonuses, which comprise the bulk of a trader’s earnings, can often be eight to 10 times their base salary.

The “A-HA” MOMENT
Lamont says he was about 17-years-old when he developed a real grasp of the bond market. He started to make predictions about where the market was headed based on the economic news of the day. And often he was right. “That’s when I knew that my dream for him had become his own dream for himself,” says Lamont’s uncle Jerry, who today is the director of Deutsche Bank’s Global Business Services Group. “Down went the posters of Michael Jordan and Barry Bonds. On the wall in his room, he suddenly had pictures of Stan O’Neal and Warren Buffett—and a lot of charts with bond yield curves.”

The summer before Lamont left for Colorado College, Deutsche Bank’s bond traders set up a training simulation for the teen. Each day, they would watch Lamont make fictitious trades based on real-world events. At the end of the summer, they judged his skill based on how much “play money” he had in his portfolio. “I was allowed to do about 10 trades a day, recalls Lamont. And by the end of the summer? “Let’s just say, the portfolio made some money,” he laughs.

Even as Lamont absorbed all he could about trading, there were lessons his Deutsche Bank mentors couldn’t teach him about being black and successful on Wall Street. For that, Lamont had his uncle Jerry and Joseph Curry, a former managing director at Bear Stearns. Curry was one of the youngest managing directors in the global investment, trading, and brokerage firm’s history (and one of few African Americans to hold that position). He met Lamont at a Wall Street benefit in 1995 and the two developed a friendship. Curry says he was impressed by Lamont’s rare combination of humility, intelligence, and confidence among other qualities. Curry and Jerry McMillan sought to preserve those qualities in Lamont, while helping him master a Wall Street social scene in which professionals often woo wealthy clients at dinner parties and other gatherings. “The trick is to be ‘in it,’ but not ‘of it,’” says Jerry. Explains Curry, now co-chairman of Orbit Holdings L.L.C.: “There are a lot of people in our business that are being taught selfishness and elitism. I wanted to be part of helping to mold a young man to achieve his potential understanding that there are no shortcuts to greatness. Don’t live your life to evade struggle; embrace it, respect it, and learn from it.”

When Lamont graduated from college in 2003, there was little doubt in anyone’s mind where the English/economics double-major would go next. Deutsche Bank, the firm he’d worked for after school and every summer since he’d entered high school, offered him a position—allowing him to begin training for the position he holds today.

STAYING GROUNDED
Lamont hasn’t seen a dull moment on the bond desk in the last few years. Government bonds, Lamont’s specialty, have been active due to record bond issuances from the U.S. Treasury as policymakers try to fund government expenditures and counteract exploding deficits. More recently, the markets have been volatile as the U.S. Federal Reserve embarked on a “quantitative easing” program, purchasing Treasuries to keep interest rates low and, it hopes, to boost economic activity. Lamont balances the pressure by staying connected with family and old friends. He unburdens himself in frequent talks with his mother, who he calls his “prayer warrior.” When Lamont got engaged earlier this year, Scott Gewirtz was one of the first people to hear the news. The trader also stays grounded by mentoring teenagers, exposing them to the world he fell in love with years ago.
One worry Lamont never has is a sense that he may have lost his childhood in pursuit of an adult dream. “It was never a tremendous sacrifice to me,” says Lamont. “I was sitting with people who I wanted to hang out with at work and outside of work, and I was doing something I loved. That’s the way trading has always been for me.”

Of course, along with the risks come many rewards. Just as his father predicted years ago, Lamont now earns more than enough to buy his own expensive watch. But, Lamont’s father, Glenn, says, “Sometimes I’ll tease him, ‘Hey that pricey Patek Philippe [watch] says the same time as my very inexpensive Bulova.’” 

(Image: ThinkStock)

It’s hard to stick to a personal financial plan when prices for basic necessities keep increasing. Though most economists insist that inflation is under control in the U.S., rising gas prices could become a real budget buster through the remainder of 2011. Recently, the average U.S. price for a gallon of regular gasoline hit $3.88, reaching its highest level since 2008.

Energy analysts see more price hikes ahead. Three-quarters of Americans drive to and from work (alone). So it makes sense that the average car-owner uses about 550 gallons of gas per year, according to the U.S. Energy Information Administration’s most recent data. At a price of, say, $4-per-gallon, many of us are spending about $2,200 a year on gasoline. Until we’re all zipping in electric cars, the best way to economize (apart from driving less) is to make sure we’re getting the best price for gas.

To help you manage the rising price of gas, I recommend these three mobile apps that can help you find the lowest gas prices wherever you happen to be driving:

• 1) GasBuddy, available for free on BlackBerry, iPhone, Android, and Windows devices.
• 2) Fuel Finder, a $2.99 iPhone-only app that promises to save you about $300 a year.
• 3) AAA TripTik Mobile, a free iPhone and Android app.

If you don’t use a smartphone, you can get the same information by visiting Gasbuddy.com, autos.msn.com/everyday/gasstationsbeta.aspx, or gasprices.mapquest.com.

Each of the apps and websites work virtually the same: punch in the name of the city or town you’re in (or the zip code), and the app spits out a map showing the location of several nearby gas stations along with their current per gallon price for “regular” gas. When I entered my own zip code in New Jersey, MSN’s tool, for instance, displayed about 12 gas stations within a five-mile radius of my home. Prices at these local pumps ranged anywhere from a high of $4.08 to a comparatively cheap $3.69. Guess where I’m filling up next time the tank’s empty?

Gilbert

Like most investors, Joe A. Gilbert pays close attention to a company’s business fundamentals and financial performance before he makes an investment. But as a self-described “catalyst-driven investor,” Gilbert also likes a stock with a compelling story to tell. “There are always inexpensive stocks, but some are cheap for a reason,” says Gilbert, one of five portfolio managers of Integrity Asset Management’s Veracity Small Cap Value Fund (VSCVX). “We’re looking for a catalyst of some kind—whether it’s legislation or new developments in the industry—anything that’s being underappreciated by the market that will allow the stock to move upward in a timely fashion.”

With Gilbert’s help, the Veracity Small Cap Value Fund posted a total return of 29% last year, compared to the S&P 500 index’s total return of 15% over the same period.

Gilbert believes the economy and financial markets can continue their recovery-related advances in 2011. “We see double-digit gains again in the market,” he notes, “and slow, gradual improvement in the economy and job market. That should give investors more confidence in investing in the market.”

This year, Gilbert likes the story freight and trucking companies are telling. Freight and trucking firms—those that help transport products and materials— have historically seen a large increase in activity when the economy goes through a recovery, Gilbert notes. black enterprise talked to Gilbert about three companies whose shares are likely to benefit from the new growth.

1 OLD DOMINION FREIGHT LINES (ODFL)
is a truckload carrier. It has a good management team. More important, its top competitors have enacted pricing increases. It gets volume and secondarily it gets pricing. There have been tonnage improvements in the overall industry, meaning more goods and materials are being shipped. That’s a good tailwind for Old Dominion. The company is small, commanding about 5% of the market. But the company’s revenue growth has been up 6% compounded over the last five years, while the rest of the industry has been shrinking. Effectively its operating margin is about 9% versus 2% for the industry. FedEx Freight, Conway, and YRC Inc. are its main competition.
PRICE: $30•  P/E: 22.95

2 WABASH NATIONAL CORP. (WNC)
designs, manufactures, and sells truck trailers and other transportation equipment. The stock was the best performing stock in the S&P 500 in 2010. It was up more than 500%. In July 2009 it was trading at 60 cents. People were pricing it for bankruptcy. Volumes went away for Wabash during the recession. Management has done a massive restructuring. It produces 24,000 trailers per year. It brought back workers that had been previously let go. Profitability should be better this time around given that it has improved the balance sheet. There is now an industry backlog in orders for Wabash’s products. Regulatory changes in trucking could demand a third axle for some trailers—meaning that trucking companies will have to place orders for new trailers from Wabash.
PRICE: $11  •  P/E: N/A

3 THE GREENBRIER COS. (GBX)
makes railroad cars. There’s a lot of need for railcars. It’s more energy efficient to use rails for transport. And as retailers across the country continue inventory restocking in anticipation of a continued recovery, we see an increase in the need for railroad companies to order new equipment. So, Greenbrier should be busy in 2011. In fact, the last four months of 2010, it received three high-volume orders. It has the largest backlog of any company in the industry. There are many big tailwinds for Greenbrier. Looking at the price-earnings ratio, this stock appears expensive, but the P/E is only high because the company is coming off of a depressed earnings base. We believe they’re about to rebound.
PRICE: $24  •  P/E: 140

Take care of mom and your taxes (Image: Thinkstock)

Uncle Sam has a few tax breaks this season to ease pressure on the so-called Sandwich Generation.

Demographic trends and the sour economy are forcing families to come together to provide for older relatives. More than one of every eight Americans between the ages of 40 and 60 is raising a child and caring for a parent at once, according to a recent Pew Research Center study. Another 7 to 10 million adults are caring for aging parents long-distance. A recent survey by caring.com shows that more than 40% of caregivers are spending more than $5,000 a year to care for an elderly family member. The same survey found that more than a third of caregivers were forced to quit jobs, take early retirement, reduce hours, or take a leave-of-absence to provide elder care themselves.

Unfortunately, many taxpayers remain unaware that tax laws allow them to write off some of the expense of elder care. “Whether you’re providing that care yourself, or you’ve hired a caregiver, you should take advantage of the tax breaks that are a true gift in these troubled economic times,” says Peter Ross, CEO of Senior Helpers, a leading provider of in-home senior care.

If you’re caring for elderly parents, here are two things you can do this season to reduce your tax burden, according to Perspective Accounting Services, a Raleigh, North Carolina tax preparation consultancy:

1) Claim your parent as a dependent

Your parent’s income, excluding Social Security, must be less than the amount of the personal exemption. For 2010, the personal exemption was $3,650. For 2011, it’s $3,700. In addition, you must provide more than 50% of a parent’s financial support to claim them as a dependent. You can claim more than one parent as a dependent if both meet the income and support guidelines. If a parent lives with you, you can include a percentage of your mortgage and utilities.

2) Deduct your parent’s medical expenses

If you contribute to a parent’s health care expenses and pay the health care provider yourself (versus giving your parent the money to pay), you may qualify to deduct costs—even if you can’t claim the parent as a dependent. To claim this deduction, you must provide at least 50% of your parent’s financial support. You don’t have to meet the income threshold. This deduction is limited to medical expenses that exceed 7.5% of your adjusted gross income. Nursing home costs, in-home health care, dental care, and prescription drugs are some of the expenses that qualify. Also: You can include your own unreimbursed medical expenses when calculating these total costs.

Before making any deductions on your taxes, be sure to consult a trained tax consultant.

Get back into the home you love (Image: Thinkstock)

Many homeowners experience foreclosure as the end of a long, tumultuous process—oftentimes beginning with a job loss. They fall behind on their mortgage payments, perhaps make unsuccessful attempts at a government-assisted loan modification, and then finally accept that foreclosure is inevitable. The average borrower who loses a home to foreclosure has gone 14 months or more without making a mortgage payment by the time their home is repossessed. After a foreclosure, many former homeowners realize that losing their house is just the beginning—they now face the uncertain process of rehabilitating their finances, credit, and self-esteem.

If you’re on the verge of a foreclosure, there are a few things you can do before, during, and after the process to help ease some of the pain:

1) Get a roof over your head. Before your mortgage holder confiscates your home, locate and secure affordable rental housing. This will help ease the transition, especially for any children involved.

2) Boost your income. If you’ve lost your job, work on locating new sources of income, whether through unemployment benefits, a temporary job placement, or part-time work.

3) Regroup emotionally. It’s a tough time for everyone involved, and foreclosure can be especially hard on a marriage. Don’t blame yourself or other family members for your predicament. Commit to working as a team to rebuild.

4) Educate yourself. Now’s the time to learn what you don’t know about personal finance. Learn the intricacies of how loans work. Study how credit scores are calculated. Keep reading BLACK ENTERPRISE.

5) Seek counseling. Many organizations offer free counseling to help those recovering from foreclosure. Try GreenPath Debt Solutions, CredAbility.org, or locate a federally approved advisory service in your area through the U.S. Department of Housing and Urban Development.

6) Draft a budget. With the help of a debt counselor or financial planner, create a budget for your new living and financial situation. Many former homeowners will also want to begin saving for the day when they can buy a home again.

7) Repair your credit. You’ll need to create a detailed plan that includes specific amounts and timetables for attacking all debts, including any residual balances from the foreclosed home, such as utility bills or property taxes.

Talk to your accountant about how you can save (Image: Thinkstock)

Call it revenge of the nerds. This is the time of year when former math majors and calculator-toting accountants become our closest friends. It’s tax time–and as of today you have just one month to go before your tax returns are due. If you haven’t filed yet, the National Society of Accountants (NSA) wants you to know that there are still plenty of last-minute strategies you can use to save money on your 2010 tax return.

Here are 10 ways to save this tax season, courtesy of our friends at the NSA:

Put your money where your mouth is (Image: Thinkstock)

Whenever I step into an unfamiliar restaurant, it always gives me a sense of comfort to see staffers, on their break, eating the same food that’s being prepared for patrons like me. Likewise, when I invest in a new mutual fund, I like to know that the people guiding that particular fund’s investments, the portfolio managers, have at least some of their personal money invested alongside me in that very fund. You should too.

Here’s how to find out: Go to Morningstar.com, type in any mutual fund’s ticker symbol, then click the menu marker that reads “filings”. Once you’re there, you’ll see a list of items, one of which will be “SAI”, or “statement of additional information”. That document includes details that fund managers must submit to government regulators and investors. It lists information such as the managers’ salaries and other portfolios they handle. The information isn’t always easy to locate, but somewhere in the document—often listed under the heading “disclosure of securities ownership” you’ll see the names of the portfolio managers along with a dollar-amount range showing how much of their own money is invested in that particular fund.

What if that figure is low or non-existent? Well, what would you think about a chef who doesn’t eat his own cooking?

• Douglas Coe
• Managing partner and chief investment strategist
• Investment Banking/ Capital Markets, Moody Reid Financial Advisors
• Kansas City, MO
• YES.
• “We’ve just entered into the second phase of one of the strongest bull markets in U.S. history. Interest rates will remain low. Stocks still remain the dominant asset class of choice for wise investors who are seeking to keep pace with inflation. Again, U.S. stocks still are undervalued.”

• Jacquette Timmons
• President, CEO
• Sterling Investment Management
• New York, NY
  YES.
• “It is important to remember that any market rally or boom is a reflection of either our collective fear or optimism. So yes, the current rally will continue provided the United States government doesn’t shut down or become engaged in another war; oil prices stabilize; and private industry job growth continues unabated. But even if unforeseen political or economic factors interrupt the current market rally, there’s every reason your “personal market rally” can continue.
• How? By making a commitment to five practices frequently abandoned at the first sign of market duress: a) Choose your investment selections based on best available information, not your feelings, b) Continue to invest in your taxable and tax-deferred portfolios using the discipline of dollar-cost-averaging, c) Match your investment strategy and products to your short- and long-term goals, d) Rebalance to take advantage of the inherent benefit of buying low and selling high, and e) Create stop-gap procedures to help you resist the temptation to let your feelings rather than your goals and what you want your money to do for you–drive your financial choices.

• Arnett Waters, Principal
• A.L. Waters Capital, LLC
• Braintree, MA
• NO.
• “Oil will trade above $150 per barrel. Gold will trade above $1,600 an ounce. Unrest in Middle East will spread. Unrest will take hold in China too. U.S. corporate earnings will decline.”

• Larry Seruma
• Managing Principal
• Nile Capital Management LLC
• New York, NY
• YES.
• “We at Nile Capital believe that the market rally is going to continue over the next year. In the next twelve months we do not see the Federal Reserve raising rates, which means the cost of capital will remain low, and earnings will continue to surprise to the upside. Unemployment will also continue to fall, which will increase consumption and encourage growth. In fact, we have already seen capital flows returning from abroad as investors’ allocation to US markets continues to increase. The biggest risk in our view remains a less accommodative stance by the Fed, however we believe that such a policy is unlikely in the short term.”

• Joe A. Gilbert, CFA, portfolio manager,
  Integrity Asset Management, LLC
• Cleveland, OH
• YES.
• “I’m still positive on the market at current valuations. Earnings will grow because of growing sales. Admittedly, most of the ‘easy’ money has already been made and the returns from here will be more modest but this does not portend to a declining stock market. We are in a maturing bull market, which requires investors to be more selective. But opportunities remain. The outcomes from geopolitical events are more binary but oil at $105 is untenable hence I believe that once oil corrects the market will go higher. Economic expansions typically last seven years and we are only in the second year of this expansion. The Federal Reserve is continuing to provide liquidity and the Obama administration has introduced more simulative policies (i.e. payroll tax cuts, accelerated depreciation). Additionally, the NFIB Small Business index has increased and the unemployment rate has just started to recede. Businesses have started to hire again and reinvest in capital equipment after a period of under-investment. There is continued positive business momentum and the economy is still operating substantially below potential output levels. Bull markets historically die on optimism and grow on skepticism and there is plenty of skepticism surrounding this market now.”

• Lee Baker, CFP
• Apex Financial Services
• Tucker, GA
• YES.
• “I expect the market rally to continue over the next year for a number of reasons. First, the Federal Reserve will continue to do everything in its power to create fertile ground for the market to continue its upward trend. In addition, we will see dollars that had been sitting on the sideline last year continue getting into the game. Currently the bond market is an unappealing place to put new money due to inflation fears. As a result that leaves stocks as the most likely landing place for those dollars. The United States’ position in the global economy isn’t what it used to be but all paths still lead to (or perhaps through) America. The continuing global economic expansion will ultimately benefit domestic markets. One cautionary note: sustained upheaval in the oil producing regions could eventually put the brakes on consumer spending. This would be a result of higher prices at the pump and the grocery store.”

• J. Michael Salley
• Registered Principal
• Salley Wealth Advisors Group, LLC
• Summerville, SC
• YES.
• “There are several important factors that point to higher stock market valuations:
• A. We are fully entrenched in an economic recovery in the US, gone are the sentiments and opinions about the possibility of a double-dip recession. As this recovery advances, albeit slowly, the stock market will continue to forecast this improving growth of the economy.B. The health of corporate America is very strong and will continue to improve. The deleveraging and strengthening of balance sheets has had a dramatic positive impact upon corporate earnings. The majority of companies continue to report earnings that are above Wall Street’s estimates. At the end of the day, it is earnings, or the lack thereof that mostly influences stock prices. I believe this trend of improving earnings will continue.C. Consumer confidence and sentiment continues to improve. In fact, a week ago I read a news article that pointed out that this improvement was more evident in the African American community, based on several surveys that were taken D. Lastly, there are trillions of dollars still sitting on the sidelines in a near zero interest rate environment, because of the fear and anxiety generated by this latest severe economic downturn. These assets will be forced to move into equities as the picture continues to brighten.”

• J. Dennis Jean-Jacques
• Author
• Five Keys to Value Investing
• NO.
• “The market rally cannot continue at the current pace over the next year. Increased government involvement in the general market makes this a very delicate time period, thereby making a continued stock market rally more unlikely. Needless to say, it is hard to ascertain whether the level of froth in the market is born from sustained economic growth or artificial stimuli. Indeed, the government has always played a role in the markets such as changing tax policies or lowering interest rates at the first sign of unwelcome economic news. Such interventions often “prop up” equity markets until sustained economic growth is restored. It can be tricky for investors to navigate as the economy becomes less dependent on artificial injections because this period produces very difficult, and often volatile, stock market environments. The time at which such transformation begins and how long the purgatory will last are the unknowns; but after TARP, tax relief, mortgage relief, QE1, and QE2, a transition must happen at this stage of the government’s prolonged intervention—which will most likely have a negative impact on the market. This is why investors should be extremely cautious during this time as this market rally is expected to take a much needed pause.”

• Ed Fulbright, CEO
• Fulbright Financial Consulting
• Durham, NC
• YES.
• I have five reasons to be positive: The economy is improving; banks are starting to lend–but slowly; more people are becoming optimistic and are starting to spend; CEOs and CFOs are starting to loosen the purse strings and are launching big projects; and commercial building projects are starting up.