Black Money on MLK Day
Had he lived, Martin Luther King Jr. (MLK) would have celebrated his 91st birthday recently. A testament to his impact on society, America will stop in its tracks on the 20th of January to commemorate his Civil Rights successes. US markets are closing, and many businesses are shutting up shop, giving us all the time to muse over racial diversity progress on the stock market.
For years, especially in the red states, the dire racial situation influenced activists. MLK was the first activist to influence the situation!
He led America in a different direction, not a swashbuckling, larger-than-life leader, nor a dictatorial change-maker who wanted a race war. He was skilled in the art of persuasion, he connected with followers of all colors, and he became a lightning rod of change through his pure passion for what was right and wrong. Props to him!
Martin Luther King had already set change in motion by his assassination in 1968, and yes, the African-American drive for business ownership took hold from there.
Starting small businesses and investing in physical assets like property have proven the most popular means of wealth-building among minorities. Two-thirds of African-American households have money tied up in the stock market with incomes above $50,000, but we’re all in the same boat when it comes to driving those types of statistics.
Best when it’s boring, the power of investing in stocks as pieces of businesses rather than as pieces of paper is becoming more and more self-evident. Stock tickers oscillating up and down send all of our heads spinning, but belief in the long game, fantasy finance to practice our strats, and opportunities in education are, of course, helping to close the racial wealth gap.
Currently, white middle-class households own an average of $86,100 in assets, while the same black households only average $11,000. That’s a shocking difference. Black CEOs also head only four Fortune 500 companies, and black female CEOs? Forget it!
Give it a few business cycles, and minorities at school today will likely have emerged into leadership roles. But clearly, there’s still a cause to support!
Invest in the Cause
Market players don’t have to ride the coattails of un-diverse companies in their portfolios. Racial equality exchange-traded funds (ETFs) are now available at competitive fees (<1%), annually rebalancing holdings based on how easy it is for minorities to climb corporate ladders.
If you would prefer to run a concentrated portfolio in firms that have excelled in embracing diversity, consider Thomson Reuter’s Diversity and Inclusion rankings. Tech firm Cisco Systems, Microsoft, and accountants Accenture top the list. Simon Property Group and Berkshire Hathaway, surprisingly, have some catching up to do!