Buying Stocks in a Slowing Economy - Black Enterprise

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Black Enterprise Magazine September/October 2018 Issue

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Betty and Reginald Parker like to gamble on such equities as technology stocks, because they have an appetite for big returns. The Columbia, South Carolina, couple figures that even with the sizzling hot economy beginning to cool, and the stock market

performing bearishly in recent months, they have no reason to change their investment strategy. Moreover, the pair will continue to carefully research companies and not make rash decisions before tapping their pocketbooks to buy stocks.

The Parkers may be typical of millions of African Americans who are turning, albeit cautiously, to stocks for retirement or income-building purposes. Reginald Parker, 43, is a family doctor, and Betty Parker is a 35-year-old sales representative for Serono Laboratories Inc., one of the nation’s largest producers of infertility drugs.

“Though the economy is tending to slow, we haven’t changed our investment habits that much,” Betty Parker said. “We still like risky investments….We feel we’re young enough to take that kind of risk.”

Enter the world of investing in stocks with the economy growth cooling off. After enjoying the longest peacetime expansion in decades, the nation’s economy is not as resilient as in previous years. Much of that deceleration this year has to do with the Federal Reserve raising interest rates six times since June 1999.

By raising rates-keeping inflation under control-and taking some steam out of such key economic indicators as consumer spending and home sales in recent months, the Fed achieved what’s known as a soft landing for the economy.

That action may also be contributing to lower-than-expected quarterly profits for numerous major U.S. companies in several industries, resulting in declining stock values. The Standard & Poor’s 500 Stock Index grew about 2.2% this year from January through early September, vs. about 9.9% in the same period in 1999.

A number of stock experts, as well as novice and experienced African American investors around the country, are delivering the same message: Don’t panic or get distracted by the hype. Signs of a weakening economy should not necessarily entice you to change your investment plans or rush to dump your portfolio.

Instead, consider using the slowing economy as a spark to fetch bargains and invest in major blue-chip corporations with lower stock prices, up-and-coming smaller companies with strong earnings, or so-called noncyclical stocks that typically deliver solid returns despite stock market or economic conditions, experts say.

They also contend that if you’re investing for the long term, as many African Americans are, for purposes such as retirement, children’s college tuition, or steady income for living and leisure expenses, be confident this economic cycle will likely pass sooner than later.

Bruce Dobbs, president and chief executive of the Malachi Group Inc., an Atlanta-based investment banking firm, says some 15 years in the business, four of which were with the Malachi Group, have shown him that the best way to make money in the market-regardless of economic conditions-is to “stay invested in good-quality stocks over a long period.”

Dobbs says that settling on one investment strategy and sticking with it may not be such a

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