The BV Insider: Rewarding Investments
By Frank McCoy, AOL BlackVoices columnist
Mellody Hobson wants to transform meal time conversations across black America. Not that she has anything against discussing sports, the happenings at work, politics, or other engaging topics.
It's just that as one of the country's top leaders under-40, she has a passion to communicate her belief that a key element to black success is wealth creation. That is, building capital through regular investments in stocks rather than reliance on a salary which only provides an income. That's why, Hobson says, investing should be a regular subject of discussion.
And as president of the Chicago's Ariel Capital Management, LLC, Hobson, 35, has the credibility to do more than talk the talk. Ariel, founded by its chairman and CEO John Rogers in 1983 as the first black-run mutual fund, has $20 billion under management.
The firm, which operates two stock funds and a bond fund, specializes in investing in overlooked and undervalued companies. And it does well. Recently, USA Today chose the Ariel Fund, which gained 16 percent in 2004, as the newspaper’s top-performing all-Star fund for the past 12 months.
It is a nice kudo. But for Hobson, who instigated an ongoing national study of black investment behavior nearly five years ago, the compliment is meaningless if wealth creation doesn’t benefit the black community. In interviews, she has said that few blacks invest in the stock market due to "lack of knowledge, lack of exposure, and lack of diversity in the industry. African-American children don't grow up knowing mutual fund managers."
To reverse this trend, Hobson, Ariel's personable chief of management and strategic planning has become a tireless financial educator. She inspires would-be investors in venues ranging from classrooms and social clubs to regular appearances as a financial consultant on ABC's Good Morning America.
The gist of her talks is practical, forward-looking, and clear enough that even a financial rookie can get it. If you learn how to manage your money, you will control and build your future.
For example, Hobson recently told her ABC audience that this year, tax refunds are projected to increase $200 on average and the typical refund may be about $2,500. She then answered the unasked question about what to do with the windfall.
Hobson presented half-a-dozen options. They include contributing to an IRA or making other financial investments, paying off credit cards, saving for college, paying down a mortgage, paying the costs to refinance, or saving the money to buy gifts instead of putting them on your credit cards.
But her investor advocacy extends beyond personal finance. The mutual fund industry has been pilloried as dishonest schemes at scandal-plagued firms have been unveiled. In response, Hobson has appeared before congress, sometimes sparring with members as she defended honest firms. She also once publicly rebuffed New York State's attorney general Eliot Spitzer when he made comments that she considered overly critical about her industry.
Of course, as an alumna of Princeton University’s Woodrow Wilson School of International Relations, Hobson knows that diplomacy also gains allies for one's cause. In recent local and national elections, she has been an effective fundraiser for Democratic candidates and the party.
Hobson's grit, intelligence, and foresight get her noticed. Hobson, who joined Ariel in 1991 after graduating from Princeton, has been asked to join corporate, non-profit and philanthropic boards. These include the Estee Lauder Companies, DreamWorks Animation SKG, Inc., and The Chicago Public Education Fund. She is also a Princeton trustee.
But her bottom-line never changes. Hobson is dedicated to showing African Americans how to get into the black financially. She believes the stock market represents the best performing type of investment and will continue to do so over the long term.
She says that would-be investors just have to realize that it doesn't take a lot of money to get into stocks. "You can invest as little as $50 a month. So don't sit on the sidelines because you think you can't afford it. Think long term of the benefits of compounding [interest]. Learn to ride the ups and downs of the market and have patience."
About the Author
Frank McCoy is a freelance writer living in the Washington, D.C. area.
March 23, 2005