Getting The Scoop On Investing

Tune in to our panel of financial news commentators as they offer the best strategies for building your portfolio

we will be shifting more toward a guns-vs-butter economy. We won’t have the technology leadership, but we will have some of those old standbys — value stocks — that will help us pull this market out of the doldrums. I’m also very impressed with the way the market has been so resilient after Sept. 11. In fact, the gains we have made since the post-attack low on September 21 are quite impressive. If you look at the historical perspective, this is the first time that we’ve seen two back-to-back yearly losses, since 1973 — 1974. If you go back and see what happened in 1975, stock markets roared to life and we saw a 30% rate of return for the Dow [Jones industrial average], Nasdaq [composite index], and Standard & Poor’s 500.

VALERIE MORRIS: I try to look through a personal finance lens [with] a multigenerational view. We have the largest amount of wealth being transferred than ever before. That transference of wealth is one of the reasons why people are more interested in understanding the markets.

One of the most important things we have to look at is “the sandwich generation.” Who is the sandwich? We are. The upper end of the [baby] boomer population [includes] people who have a finite amount of money [and] are trying to get ready to retire. They’ve made good plans, but they didn’t necessarily count on the bubble popping. The generation X children we’ve produced were at dotcoms and lost money there, or [they gained] skills with narrow marketability. Now, they are out of a job [and] returning home. You also have frail parents who are living longer, [and] they may be outliving the money they so judiciously set aside [for] their golden years. So, it’s not just what do my husband and I have set aside for us. It has to be what does [the investment strategy] mean to these three generations. Boomers will have to deal with this over the next 20 years.

B.E.: What has been the impact of Sept. 11 on investing trends?

ERIC McKISSACK: Our view is that our community, as well as all investors, should take a longer view. As students of history, we compared [the attacks] to other catastrophic events like the Gulf War period or the assassination of [President John F.] Kennedy. We’ve seen that the market has sold out very dramatically after those [events] but recovered very quickly. That’s kind of what we have seen with this event.

We’re looking at 2002 with a cautiously optimistic eye, and we remain encouraged that the area that we focus in — value investing — will probably continue to fare very well through what is an uncertain environment. Investors who have been sitting on the sidelines should not do that. You should use these periods to reallocate [your assets].

B.E.: Are African Americans confident about the market or have they started retrenching?

McKISSACK: The 2001 [Ariel Mutual Funds/Charles Schwab & Co. Inc. Black Investor Survey] showed that we are more sensitive to market volatility. [It showed that] 88%

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