Black Investment for the 21st Century

As calls for blacks to invest more aggressively become more insistent, our Board of economists examines the potential for building wealth in the new millennium

Well, the blinders had to come off at some point. After decades of being skittish and standoffish about the stock market, the idea is slowly being embraced by African Americans. This could be due to the national attention the Dow attracted in 1998 by flirting with the record 10,000 mark. Or perhaps the sweeping growth of company 401(k) plans, the formation of organizations like the Coalition of Black Investors, or even initiatives, like the Wall Street Project, trumpeted by the Rev. Jesse Jackson have all helped shine a light on the Dow. Whatever the reasons, a growing number of black Americans are beginning to explore the stock market as a viable wealth building vehicle. The questions are: Is it too late? And are enough of us coming along for the ride?

The BLACK ENTERPRISE Board of Economists (BEBE) convened last October in Washington, D.C., for its semi-annual meeting to discuss the challenges facing black investors and made a series of proposals aimed at urging more African Americans to become active participants in the stock market. Present at the discussion were Earl G. Graves Jr., president and COO of BLACK ENTERPRISE magazine, David H. Swinton, president of Benedict College; Margaret C. Simms, vice president of research at the Joint Center for Political and Economic Studies; Cecilia A. Conrad, an economics professor at Pomona College; Marcus Alexis, a professor of economics and management and strategy at Northwestern University; Lucy Reuben, Dean of the School of Business at South Carolina State University; Thomas D. Boston, an economics professor at the Georgia Institute of Technology; and Andrew F. Brimmer, president of Washington D.C.-based Brimmer & Co. The Board was joined by guest presenter Mellody Hobson, director of marketing with Ariel Capital Management, a black-owned and managed mutual funds firm. Hobson brought a unique understanding of the dilemma to the table. Ariel Mutual Funds, in conjunction with Charles Schwab & Co., recently completed a Black Investor Survey that examined the savings and investment strategies of African Americans compared to whites.

In a tumultuous year in which the Dow climbed to unprecedented heights only to plunge without warning, the Board was presented with a number of questions. In light of the current economic climate, what are the financial implications for African Americans if we, as a group, don’t move from being unfocused consumers to savvy investors? And what’s the best way to communicate this information to the broader market of African Americans?

Ariel’s Black Investor Survey examined 1,232 respondents (500 blacks and 732 whites), ages 18 and older, with an annual household income of $50,000 or higher.

The findings were mixed. The good news: the majority of African Americans polled (57%) currently have money invested in the stock market. One-half reported having accounts in brokerage or mutual fund companies and reported having been invested for an average of 10 years.

The bad news: 55% of blacks say they’re doing a fair or poor job of saving money compared to 38% of whites. More than three-quarters of those surveyed believe they

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