Tag Archives: warren buffett


HBCU Money™ Business Book Feature – Makers and Takers: The Rise of Finance and the Fall of American Business

Eight years on from the biggest market meltdown since the Great Depression, the key lessons of the crisis of 2008 still remain unlearned—and our financial system is just as vulnerable as ever. Many of us know that our government failed to fix the banking system after the subprime mortgage crisis. But what few of us realize is how the misguided financial practices and philosophies that nearly toppled the global financial system have come to infiltrate ALL American businesses,  putting us on a collision course for another cataclysmic meltdown.

Drawing on in-depth reporting and exclusive interviews at the highest rungs of Wall Street and Washington, Time assistant managing editor and economic columnist Rana Foroohar shows how the “financialization of America” – the trend by which finance and its way of thinking have come to reign supreme – is perpetuating Wall Street’s reign over Main Street, widening the gap between rich and poor, and threatening the future of the American Dream.
Policy makers get caught up in the details of regulating “Too Big To Fail” banks, but the problems in our market system go much broader and deeper than that. Consider that:

· Thanks to 40 years of policy changes and bad decisions, only about 15 % of all the money in our market system actually ends up in the real economy – the rest stays within the closed loop of finance itself.
· The financial sector takes a quarter of all corporate profits in this country while creating only 4 % of American jobs.
· The tax code continues to favor debt over equity, making it easier for companies to hoard cash overseas rather than reinvest it on our shores.
· Our biggest and most profitable corporations are investing more money in stock buybacks than in research and innovation.
· And, still, the majority of the financial regulations promised after the 2008 meltdown have yet come to pass, thanks to cozy relationship between our lawmakers and the country’s wealthiest financiers.

Exploring these forces, which have have led American businesses to favor balancing-sheet engineering over the actual kind and the pursuit of short-term corporate profits over job creation, Foroohar shows how financialization has so gravely harmed our society, and why reversing this trend is of grave importance to us all. Through colorful stories of both “Takers” and “Makers,” she’ll reveal how we change the system for a better and more sustainable shared economic future.

— Financial Times – Best Books of 2016: Economics
— Bloomberg Businessweek- Best Books of the Year

Personal Finance Tips From Warren Buffett


The HBCU Money™ staff also adds some commentary to the subjects of Mr. Buffett’s quotes to provide more depth and better understand the points.

  • EARNINGS: There are three different types of income. Earned, passive, and investment income. Guess which is taxed the highest? The one you go to work for. Passive income (e.g. rental property, limited partnerships, intellectual property) if properly managed can be taxed at near zero income. Investment income (e.g. dividends from stock ownership) falls under 0, 15, or 20 percent based on taxable income. More importantly, these incomes are not based on you leaving the house or your boss liking you.
  • SPENDING: It is not how much you make, but what you do with what you make. There is nothing wrong with having nice things, however, in an era where people do things to project a social media lifestyle, keeping up with the Joneses, Smiths, and everyone else has become even more problematic. Use personal finance tools like Mint.com or others to help you track your spending and give yourself a grade on a month by month basis.
  • SAVINGS: Why is it so hard? Wages have been flat for a long time that is for sure, but we must play the hand we are dealt. The question is does pride get in the way of many people saving.  Most people’s biggest expense is housing, yet how many are willing to take on a roommate or two for a year or two to save? Saving must become a habit that can start small and snowball with time with discipline. Find a friend and compete with them if that helps, but find the thing that pushes your button to do it.
  • RISKS: Are you 50/50 about a coming raise and decide to buy that car you always wanted or put that foreign vacation on the credit card? Then you just failed at risk management. Risk is always about understanding the pros and cons of any financial decision and finding ways to mitigate that risk. You bought the car? Okay, so you Uber and add extra income until you get the raise. If you do not, then keep Ubering. Again, risk management is vital to one’s long-term financial planning.
  • INVESTMENT: When do you need a financial advisor? When you are rich you say? Think again. The moment you have a job you need a financial advisor and probably not just one. Checks and balances (risk management). Is your only investment account your retirement account? There are multiple financial investments to consider from owning stocks, owning a stake in a small business, to even owning land. All of these make up the ingredients that is your financial pie. How one distributes them is up to your own risk tolerance, but you have never eaten an apple pie using only apples. No one thing is going to make you wealthy or preserve it.
  • EXPECTATION: This is something that we must reflect on within ourselves and from those around us. We expect to be wealthy, but is our behavior matching it? Are we surrounding ourselves with likeminded people in our pursuits? We can not expect to be financially sound and surrounded by those who want to go to the mall every weekend. Are we patient with our investments? Or do we chase “get rich quickly” schemes because we have not educated ourselves properly to have the proper expectation of savings, budgeting, investing, and the TIME it takes to accomplish those goals.

Need in depth help on all of the above?

Watch this staff recommended Youtube video by Dan Griffin, CPA entitled “Saving & Investing Basics: A Guide for Young Adults” here.

Be sure to also read HBCU Money’s “Recommending Reading for African American Financial Starters” here.

2015 Ariel Investments Black Investor Survey Shows Investment Gap Stubbornly Unchanged


“The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett

From 1998 to 2010 Ariel Investments, an African American owned investment firm headquartered in Chicago, has conducted a study on the state of the African American investor in comparison to European American counterparts. Absent for five years, in 2015 the company resumed its research and released an update on the state of the African American investor. Overall, African American participation still trails European Americans by nineteen percentage points and nothing seems to influence that participation among African Americans more than education and income, while European Americans saw negligible change in participation regardless of income or education in the study.


  • In 2015, black investing is at 67 percent, while white investing is at 86 percent.
  • African Americans between $50 000 and $100 000 per year in household income, 57 percent are investors, while that numbers jumps to 81 percent for households making over $100 000.African Americans earning over $100 000 are 47 percent more likely to be invested than those earning between $50 000 and $100 000. For European Americans, that gap is 10.8 percent.
  • African Americans with graduate degrees have a 72 percent participation rate, while those with a bachelors or less participate at 63 percent. That is a 14.3 percent gap, while for European Americans it is only 2.3 percent in regards to education.
  • Real estate for the first time is not considered the “best investment overall” by African Americans. After being at 61 percent in 2004, real estate dropped to 37 percent as best investment overall. On the flip side, stocks have climbed from 28 percent to 41 percent as best investment overall.
  • The state of retirement has drastically changed from a decade ago where 42 percent of African Americans expected to retire before the age of 60; now that sentiment stands at 17 percent.

Being at a company that offers a retirement plan is critical to African American investing than European Americans. There was a 40 percent more likelihood that for African Americans this was the entry into investing. The most baffling part of the report highlights African American economic illiteracy perhaps. 3 out of 4 African American households feel hopeful about the current U.S. economy, while European Americans were 2 out of 4. Two-thirds of African Americans feel the economy has or is almost fully recovered from the recession, while well under half of European Americans felt the same. And lastly on the economy, African Americans at a two-thirds clip feel bullish about the stock market, while just over half of European Americans do. Ariel Investments reports, “African American bullishness has increased since 2005, whereas for whites, it has decreased in the last decade.” The ascension of President Obama’s election in 2008 certainly can explain some of that, but not much explains the previous four years prior to his election. Even the presence of the President Obama during the greatest recession since the Depression has to make one question African American sentiment and what it was rooted in – if anything. A Great Recession that depleted 83 percent of African American wealth in large part because of that heavy dependency on the aforementioned real estate as the best investment overall. The conundrum is that despite this very bullish conviction on the economy, it is not causing a closure in the investment gap.


Highlights & Solutions:

Overall investment participation. European Americans are almost 30 percent more likely to be invested.

  • Education and income being the primary drivers, which is a negative. In other words, how do we get less educated and lower income African Americans to participate. One solution is the reemergence of investment clubs tucked in neighborhood organizations. Using small monthly buy-ins of $5-15 per month can potentially be more enticing among lower income, while exposing them and allowing them to reap the benefits of pooled money.

Market participation among Baby Boomers is stark when it comes to race. European Americans over the age of 65 are invested 57 percent more than their African American counterparts.

  • The consequences of this is far reaching. As African American Baby Boomers pass away, the gap in potential inheritance for heirs and African American institutions will be acute to their counterparts. African American Baby Boomers reliance on government employment and its current contraction

In the past five years, African American for the first time find stocks to be a better investment than real estate. A sign that African America is becoming more willing to take on risk in their portfolios.

  • This trend hopefully will continue. However, in a follow up to the question, almost two-thirds of African American investors believe a home improvement is a better investment than stocks. A need for tangible investments versus abstract ones such as stock maybe a cultural hurdle that financial advisers must overcome to engage more African Americans. Investors must do research to make sure the home improvement they are thinking of engaging will actually add value to their home. Remember, there are only two ways to pull value out of a home – sell it or borrow against the equity. In either case, an investor must ask themselves what their plans are with the new capital and how it will impact their portfolio.

There has been no asset class over the past one hundred years with a better return than equities. African America’s lack of disposable income the past few generations have caused it to lose out on many of the wealth gains other groups have experienced. Having the lowest median income of all groups has certainly been a problem, but for those who can engage must do so if we are to have a formidable plan of closing the wealth gap for African Americans.

For the full Ariel Investment report, click here.




HBCU Money™ Business Book Feature – The World’s Greatest Investors You’ve Never Heard Of


A practical guide for investors who are ready to take financial matters into their own hands

The Warren Buffetts Next Door profiles previously unknown investors, with legendary performance records, who are proving every day that you don’t need to work for a hedge fund or have an Ivy League diploma to consistently beat the best performing Wall Street professionals.

These amazing individuals come from all walks of life, from a globe drifting college dropout and a retired disc jockey to a computer room geek and a truck driver. Their methods vary from technical trading and global macro-economic analysis to deep value investing. The glue that holds them together is their passion for investing and their ability to efficiently harness the Internet for critical investment ideas, research, and trading skills.

  • The author digs deep to find the best of the best, even finding those who are making money during these turbulent times
  • Contains case studies that will explain to you how these great individual investors find and profit from stocks and options.
  • Shows you how to rely on your own instincts and knowledge when making important investment decisions

In an era when the best professional advice has cracked many investor nest eggs and Madoff-style frauds have shattered investor trusts, the self-empowered investors found in The Warren Buffetts Next Door offer an inspiring and educational tale.

HBCU Money™ Business Book Feature – Security Analysis

Security Analysis

The Long-Awaited Reprint of Graham and Dodd’s Masterful First Revision

The first edition of Security Analysis, published in 1934, forever changed the theory and practice of successful investing. Yet the remainder of that tumultuous decade brought unprecedented upheaval to the financial world, compelling Benjamin Graham and David Dodd to produce a comprehensively revised second edition.

It is that edition, out of print for decades, that you now hold in your hands. Security Analysis, Second Edition, published in 1940, is considered by many (including legendary Graham student Warren Buffett) to be vastly superior to the first. Yet after three subsequent editions and over six decades, the insightful and instructive second edition could be found only in rare bookshops and closely-guarded private collections.

McGraw-Hill, the book’s original publisher, is honored to publish Security Analysis: The Classic 1940 Edition. Identical in every meaningful aspect to the classic original, this is the long-awaited book that set the tone for decades of value investors. Let it provide you with a greater understanding of this country’s financial heritage, along with timeless value investing insights that have proven relevant and profitable in all types of markets and financial environments–and will never go out of style.

“The lapse of six years since first publication of this work supplies the excuse, if not the necessity, for the present comprehensive revision … We have revised our text with a number of objectives in view. There are weaknesses to be corrected and some new judgments to be substituted.”–From the Preface

The names Graham and Dodd have come to be inextricably linked in the minds of thoughtful, disciplined investors. Their 1934 book Security Analysis made the two synonymous with intelligent, long-term investing, and forever changed the face of Wall Street. While post-Crash traders and investors treasured the book for its rigorous honesty, determined logic, and unequalled track record of success, the authors saw only the “weaknesses to be corrected.”

The second edition of Security Analysis, published in 1940, allowed Ben Graham and David Dodd to set the record straight. It was considered by many then, and is considered by many now–including Graham student and disciple Warren Buffett, to be superior in many ways to the first. Still, as subsequent revised editions appeared, the once-indispensable second edition fell out of print and became virtually impossible to locate.

With Security Analysis: The Classic 1940 Edition, McGraw-Hill returns this long-sought investment classic to the marketplace. While its timeless advice–that investors should ignore social trends, company prospects, and management styles to focus on the balance sheet–is as vital today as it was in 1940, it is the book’s updated insights and observations that justify its importance in the annals of both investing and publishing.

Even as the financial world sang the praises of 1934’s groundbreaking Security Analysis, Benjamin Graham and David Dodd knew they could improve it. And that they did, with the 1940 publication of a brilliant second edition. Now, after having been unavailable for decades, this influential book returns in Security Analysis: The Classic 1940 Edition. As powerful today as it was for investors six decades back, it will reacquaint you with the foundations of value investing–more relevant than ever in tumultuous 21st century markets–and allow you to own the only book that could rightfully claim to have improved upon the eloquent first edition of Security Analysis.

About the Author

Benjamin Graham was a seminal figure on Wall Street and is widely acknowledged to be the father of modern security analysis. The founder of the value school of investing and founder and former president of the Graham-Newman corporation investment fund, Graham taught at Columbia University’s Graduate School of Business from 1928 through 1957. He popularized the examination of price-to-earnings (P/E) ratios, debt-to-equity ratios, dividend records, book values, and earnings growth, and also wrote the popular investors’ guide The Intelligent Investor.

David Dodd was a colleague of Benjamin Graham’s at Columbia University, where he was an assistant professor of finance.