Should African Americans Invest in Stocks to Make Obama ‘Look Good?’

Warning: getimagesize(): Filename cannot be empty in /home/blackenterprise/public_html/wp-content/themes/blackenterprise/single-standard.php on line 35

0313_investingIn a recent blog, I mentioned a rather provocative question we received from Craig Farmer, a reader from Philadelphia. He wrote: “Should African Americans invest in stocks in order to prop up the market and make President Obama look good?” In the previous write-up, I made passing reference to Farmer’s query, but didn’t give it the full treatment it deserves. So, here goes:

It wasn’t that long ago that we all huddled around the closest television set or braved one of this winter’s coldest days in Washington to watch Barack Obama stride down Pennsylvania Avenue. Along with the great international fanfare, talk of reconciliation (both racial and political) was all the buzz. But, here we are less than 60 days later, and Obama is being blamed for an economic crisis and market collapse that were decades in the making. A recent BusinessWeek article posed the the question “Did Obama Cause the Stock Slide?” In trying to make sense of the president’s proposed budget and tax policies, CNBC commentator Larry Kudlow recently penned a piece under the headline,Obama Is Declaring War on Investors, Entrepreneurs, Businesses, and More.” Those who supported Obama during the campaign are probably wondering what they can do to help. In that context, Farmer’s question makes perfect sense.

My answer is complicated. So, I’ll divide it into four parts:

1. Never invest for any reason other than to build wealth for you and your family. I know this sounds like a cold-hearted capitalist response. But investing in the financial markets requires you to cast rational judgment on the strength and viability of the companies and entities to which you are entrusting your savings. Those decisions must be made without loyalty to any industry, company, nation, or even racial group. The best reason to invest right now? Share prices of many good companies (when you compare current valuations to future earnings potential) are low. There’s a sale going on. Aside from that, there are other ways to exercise your sense of obligation to African American causes through charity and support of local black businesses–which Black Enterprise heartily encourages. There are also, of course, ways to express your political beliefs by way of political party contributions. Your investment portfolio, however, is no place for those expressions.

2. African Americans make up 13% of the U.S. population and (unfortunately) an even smaller portion of investors. According to a recent annual study by Ariel Capital and Charles Schwab, 62% of black households earning more than $50,000 a year own stocks and mutual funds, compared to 82% of white homes of equal economic status. African Americans, therefore, can’t “prop up” the financial markets.

3.  The stock market won’t be the best way to gauge Obama’s performance. As of the time of this writing in early March, the Dow Jones Industrial Average is continuing a downward slide that began in the Fall of 2007. The markets are an interesting barometer of

Pages: 1 2
  • william robinson

    they shouldnt invest in cca where they killed a woman named estell richardson bush nad his croonies had there hand in the jail check out gus puyer as well

  • Hello Mr. John Simons,

    Outstanding! Thank you for publishing this insightful, thought-provoking post.

    There are a plethora of stocks at bargain basement prices for long-term, wise investors to seize before the stock market rebounds.

    Time will prove itself to be President Barack Obama’s best critic. Despite Rush Limbaugh’s “fear-based” desire to see President Obama fail, he will succeed.


  • Valerie

    No, you should NEVER do anything that will not directly benefit you and/or your family.

    Yes, Black people should invest in stocks, but only after they have learned about investing and have some appreciation for what they are doing and the risks they are taking. Investing in stocks is a good way to build wealth and take control of your financial future.

  • ThatOne

    African Americans should invest in instruments that will make them wealthy. That’s IT. I don’t even understand why this question was posed?

  • william robinson

    Oh i also wanted to say if you want to hear about the estell richardson murder case go to vibes blog and go to harlem heights and hear my story before and after ladies death and hear the truth on what they did in that facility plus i wanted to add something a blackgaurd from trinidad said to me and you will read it on the blog on the vibe blog and thanks black interprise and for letting me say my story but this gaurd said to me that and excuse my french that niggas kill niggas everyday i shouldnt have to say anymore

  • Sheryl P. Simons

    After watching Nightly Business Report for the past 5 months, I have made some moves because I believe the time is right. Some weeks ago, I saw your interview on this same program. During the past year, several major branches of the Simons Family have reconnected. Please contact me. Thank you.