In my early 20s, working my first job out of school, I received a promotion and a large, unexpected cash bonus. The day before the payment hit, I checked my bank accounts. I had a negative net worth and a total of $667 to my name. "One dollar more than the devil," I thought to myself. Overnight, I paid off my college loans, set up an emergency fund, and funded a brokerage account.
I then purchased a book that changed the course of my life: Roger Lowenstein’s Buffett: The Making of an American Capitalist (1995). I learned of the book after reading an interview with the Black fund manager John W. Rogers Jr., who recommended it strongly. In those pages, I saw the blueprint of the life I wanted to lead. I'd never owned a share of stock, though, and I didn't think I was ready to. I studied the business press daily and read several other books, including Philip A. Fisher’s Common Stocks and Uncommon Profits (1984) and Benjamin Graham and David Dodd’s Security Analysis (1934).
My timing couldn't have been better. It was 2008, and as the financial markets came undone, I was learning how businesses worked and how to analyze them, earning money, and saving. Several months later, I felt ready to invest.
I made my first investment on November 11, 2008. It feels like centuries ago technologically. My broker at the time had no online platform to invest. So, I went into my office in Manhattan, up to the 33rd floor, stood in an empty conference room overlooking the Hudson River, and made a phone call. I placed an order for shares in Rocky Mountain Chocolate Factory. I'd never been to one of the company's locations or sampled its products. I read its financial statements in detail, though, and I understood its value proposition and competitive advantages. My weighing of the probabilities suggested the business was underpriced. As I still do today, I wrote my reasoning down. Before I sold out a few years later, I made a handsome return. Other, more profitable investments would soon follow.
I reflected on this as I read a Wall Street Journal article today about rising interest in stocks among Black American youth. This is a good thing, especially if most are accessing equity markets through low-cost, diversified ETFs.
I once wrote in an investor update for The Mutoro Group about the appeal of financial markets to me as a young Black American. From my Q3 2016 Letter:
What I am trying to say is that all investors eventually learn that the public markets do not care where you went to school, what your zip code is, or how much money you or your friends have. Nor will any of these help you. I have always welcomed this. The impersonality in the vicissitudes of markets can also be viewed as a lack of bias. To a young African-American man such as myself—living in a world where he is told on the one hand that his race does not matter, but confronted with more examples than he can count where it clearly does—trying to build a record of achievement through taking advantage of an environment truly disinterested in your background is inspiring.
When I shared this, an old white guy who was very well-established and connected in the investment management industry emailed me to complain. He said he didn't understand this paragraph. Why was I bringing up race? I was disappointed but not surprised. This guy—who managed billions of dollars—apparently didn't have basic reading comprehension or was so ignorant of lived experiences beyond his own that he couldn't appreciate other perspectives.
So, I'll repeat it more simply. What I love about investing is the markets don't care who you are. What I love about owning financial securities is my share of Berkshire is valued the same as your share of Berkshire, and I can get the same terms buying or selling shares as you can. That’s not true elsewhere.
It is well-established that real estate appraisers often value the assets of Black property owners less. It is also well-established that job seekers with more stereotypically white names will receive more opportunities than those with stereotypically Black names. And unlike me making a phone call to buy stocks, this isn't ancient history. Despite what billionaire morons like Elon Musk and Bill Ackman would have you believe, the greatest threat to American society is hardly DEI. Corporate America has a long way to go in promoting not just diversity, equity, and inclusion, but also belonging. I could write a whole book about the ridiculous racial biases I've seen and experienced in just the last five years. We have yet to reach the world MLK famously imagined in his “I Have a Dream” speech during the 1963 March on Washington for Jobs and Freedom. What I love about investing, though, is that if you're a regular person investing in the public markets, you receive no benefit or reduction in the value of your holdings because of your race, sex, religion, etc. (It is more complicated as a professional investor, where your job is investing, and well-established biases in fundraising and investor commitments come into play. But that is for another note.)
Racism is the disease of the person being racist, not mine. So, I focus on what is within my circle of competence and that I can influence strongly. For me, it means I gravitate to entrepreneurship and long-term investing in public markets. And I try to remember MLK’s words from his Street Sweeper speech:
"What I'm saying to you this morning, my friends, even if it falls your lot to be a street sweeper, go on out and sweep streets like Michelangelo painted pictures; sweep streets like Handel and Beethoven composed music; sweep streets like Shakespeare wrote poetry; sweep streets so well that all the hosts of heaven and earth will have to pause and say, 'Here lived a great street sweeper who swept his job well.'"