MLK Jr Day – The Old Boys’ Club: The Investing World’s Diversity Problem

MLK Jr. finance MLK Jr Day
MLK Jr Day

Today we celebrate Martin Luther King, Jr. Day – MLK Jr Day.

Over half a century ago, Dr. King cried out:

I have a dream that one day this nation will rise up and live out the true meaning of its creed: “We hold these truths to be self-evident, that all men are created equal.”

While we’ve come a long way from 1963 in many aspects, the world of finance sadly still remains an Old Boys’ Club, filled with – you guessed it – white males.

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As of 2009, women made up less than 18% of the finance industry’s workforce, down from 21% in 2000. Blacks and other minorities are still underrepresented by big margins. Blacks make up 5.9% of Wall Street’s workforce. Latinos: 6%.

Not only is this widening the ever-increasing wealth gap, it’s also hurting performance: according to astudy by McKinsey, companies with more diverse top teams are also top financial performers.

This diversity problem is partly driven by Wall Street culture, partly by self-selection (fewer women and minorities seek and earn the credentials that investment firms typically want), and partly by a lack of role models.

So in honor of Martin Luther King, Jr., here’s a shout out to some of the top African-American investors and the top women investors:

MLK Jr Day – African-American Investors

Robert F. Smith

MLK Jr Day

Robert F. Smith is an American investor. He is the founder, chairman and CEO of Vista Equity Partners, an investment firm with over $14 billion in assets as of October 1, 2015. Smith is ranked by Forbes as 268th richest man in America, and the second wealthiest African-American on the list, trailing only Oprah Winfrey

Bob Johnson

Robert Louis Johnson is an American businessman, media magnate, executive, philanthropist and investor. He is the founder of Black Entertainment Television, which was sold to Viacom in 2001. He also founded The RLJ Companies, a holding company that invests in various business sectors. Johnson is the former majority owner of the Charlotte Bobcats.[8] He became the first black American billionaire.

Chris Gardner

Christopher Paul “Chris” Gardner is an American entrepreneur, investor, stockbroker, motivational speaker, author, and philanthropist who, during the early 1980s, struggled with homelessness while raising his toddler son, Christopher, Jr. Gardner’s book of memoirs, The Pursuit of Happyness, was published in May 2006.

As of 2012, he is CEO of his own stockbrokerage firm, Gardner Rich & Co, based in Chicago, Illinois, where he resides when he is not living in Toronto. Gardner’s personal struggle of establishing himself as a stockbroker while managing fatherhood and homelessness is portrayed in the 2006 motion picture The Pursuit of Happyness, directed by Gabriele Muccino and starring Will Smith.

Daymond John

MLK Jr Day

Daymond Garfield John is an American entrepreneur, investor, television personality, author and motivational speaker. He is best known as the founder, president, and CEO of FUBU, and appears as an investor on the ABC reality television series Shark Tank.

Laurence C. Morse, Ph.D.

MLK Jr Day

A co-founder and a Managing Partner at Fairview Capital, a private equity investment management firm. Dr. Morse serves on a number of advisory boards of venture capital partnerships including U.S. Venture Partners (USVP), Battery Ventures, Sierra Ventures and Trinity Ventures. He is a member of the board of directors of Webster Financial Corporation and the Institute of International Education. He is a member of the board of trustees of Princeton University, and formerly served on the board of its investment company.

Victor B. MacFarlane

MLK Jr Day

MacFarlane is the managing principal of MacFarlane Partners, the leading minority-owned real estate investment management and development firm in the U.S., which he founded in 1987 to provide real estate investment management services to institutional investors. The company now has $2.2 billion in investor equity and $6 billion in properties completed and under management.

MLK Jr Day – Women Investors

Geraldine Weiss

MLK Jr DayGeraldine Weiss was one of the first women to make a name for herself in finance and to prove that women could be successful investors. She learned about investing by reading books and listening to her parents’ conversations, and also studied business and finance in college.

Despite being a top finance student at the University of California, no investment firm was interested in hiring her as more than a secretary. “It was a man’s world, and women need not apply,” she recalls.

In the face of rejection, she started her own investment newsletter in 1966, at the age of 40. A response to one of her newsletter advertisements read, “I can’t imagine myself ever taking investment advice from a woman. Unless you take your advice from a man.”

Wanting to avoid further gender discrimination, she decided to sign her newsletter “G. Weiss.” It wasn’t until the mid-1970s that she revealed her true identity after achieving a consistently successful track record.

Weiss’s value-based, dividend-oriented stock-picking strategy outperformed the strategies recommended by other newsletters and has achieved above-average returns even in poor markets. She published her newsletter, Investment Quality Trends (IQT), for 37 years until she retired in 2003. The newsletter still exists and still follows Weiss’s strategy.

Muriel Siebert
MLK Jr Day
MLK Jr Day

In 1967, the NYSE was a world where no woman-owned brokerage firm had ever gone before. Siebert changed that. Despite blatant and constant attempts to keep her brokerage firm, Muriel Siebert & Co., from registering with the NYSE, she refused to take “no” for an answer. Unfortunately, her company remains the only woman-owned national brokerage firm on the NYSE today. Siebert passed away in 2013 leaving a rich legacy in finance and politics that continues to inspire and encourage women today.

Lubna S. Olayan
MLK Jr Day
MLK Jr Day

Saudi Arabia is known for the stifling limitations it places on women in the social, political, and business realms. Olayan didn’t let that stop her. After building an illustrious career in finance rising through the ranks of Olayan Finance Company, a conglomerate of 40 manufacturing firms, she is now the CEO. Despite her heritage, she often faces intense criticism. She does so with grace and strength, and refuses to let the ignorance and oppression of the Saudi government limit her. She serves as a pillar of courage to women in the Middle East and all over the world.

Deborah A. Farrington
MLK Jr Day
MLK Jr Day

StarVest Partners is a behemoth in the world of venture capital, where Farrington is a co-founder. She’s also served as President and CEO of Victory Ventures, LLC; Chairman of Staffing Resources, Inc; and continues to hold numerous director and committee roles at technology companies, Smith College, and Harvard (her alma maters), and a leading international microfinance organization.

MLK Jr Day – Marianne Abib-Pech
MLK Jr Day
MLK Jr Day

After a successful business career that included stints at Arthur Andersen, GE, and Shell International Petroleum, Abib-Pech struck out on her own. She boldly moved to Hong Kong to write an investment book and founded Lead the Future (LTF), a leadership consulting firm, financial advising, and thought leadership platform rolled into one. High-profile oil and gas companies are among her diverse clients.

Kathy Xu
MLK Jr Day

Warren Buffett is known for only investing in concepts he can understand. He doesn’t jump on fads and isn’t persuaded by paper-thin trends. Kathy Xu, arguably the most successful investor in China (male or female), is known for her prudence and shrewd decisions. Once she makes an investment, she’s in it for the long haul. Xu started her Shanghai-based private equity firm, Capital Today, 10 years ago and her track record is impeccable. Her latest jewel? The IPO of JD, China’s second largest e-retailer.

Nehal Chopra
MLK Jr Day
MLK Jr Day

Since the last recession cycle started in 2007, hedge funds and their managers have been hammered by less-than-appealing returns. Ratan Capital Management, the firm founded by Chopra, has bucked that trend to the envy of every other hedge fund manager, often returning 20%+. At 35, she oversees $750 million in assets.

MLK Jr Day – Summary

There are, of course, many more great African-American and women investors not on these lists, as well as many other investors like Mohnish Pabrai, Carlos Slim, and Robert Kiyosaki.

Is there someone that I missed? Give them a shout out in the comments section!

Read more great articles at Vintage Value Investing.

 

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Ben Graham, the father of value investing, wasn’t born in this century. Nor was he born in the last century. Benjamin Graham – born Benjamin Grossbaum – was born in London, England in 1894. He published the value investing bible Security Analysis in 1934, which was followed by the value investing New Testament The Intelligent Investor in 1949. Warren Buffett, the value investing messiah and Graham’s most famous and successful disciple, was born in 1930 and attended Graham’s classes at Columbia in 1950-51. And the not-so-prodigal son Charlie Munger even has Warren beat by six years – he was born in 1924. I’m not trying to give a history lesson here, but I find these dates very interesting. Value investing is an old strategy. It’s been around for a long time, long before the Capital Asset Pricing Model, long before the Black-Scholes Model, long before CLO’s, long before the founders of today’s hottest high-tech IPOs were even born. And yet people have very short term memories. Once a bull market gets some legs in it, the quest to get “the most money as quickly as possible” causes prices to get bid up. Human nature kicks in and dollar signs start appearing in people’s eyes. New methodologies are touted and fundamental principles are left in the rear view mirror. “Today is always the dawning of a new age. Things are different than they were yesterday. The world is changing and we must adapt.” Yes, all very true statements but the new and “fool-proof” methods and strategies and overleveraging and excess risk-taking only work when the economic environmental conditions allow them to work. Using the latest “fool-proof” investment strategy is like running around a thunderstorm with a lightning rod in your hand: if you’re unharmed after a while then it might seem like you’ve developed a method to avoid getting struck by lightning – but sooner or later you will get hit. And yet value investors are for the most part immune to the thunder and lightning. This isn’t at all to say that value investors never lose money, go bust, or suffer during recessions. However, by sticking to fundamentals and avoiding excessive risk-taking (i.e. dumb decisions), the collective value investor class seems to have much fewer examples of the spectacular crash-and-burn cases that often are found with investors’ who employ different strategies. As a result, value investors have historically outperformed other types of investors over the long term. And there is plenty of empirical evidence to back this up. Check this and this and this and this out. In fact, since 1926 value stocks have outperformed growth stocks by an average of four percentage points annually, according to the authoritative index compiled by finance professors Eugene Fama of the University of Chicago and Kenneth French of Dartmouth College. So, the value investing philosophy has endured for over 80 years and is the most consistently successful strategy that can be applied. And while hot stocks, over-leveraged portfolios, and the newest complicated financial strategies will come and go, making many wishful investors rich very quick and poor even quicker, value investing will quietly continue to help its adherents fatten their wallets. It will always endure and will always remain classically in fashion. In other words, value investing is vintage. Which explains half of this website’s name. As for the value part? The intention of this site is to explain, discuss, ask, learn, teach, and debate those topics and questions that I’ve always been most interested in, and hopefully that you’re most curious about, too. This includes: What is value investing? Value investing strategies Stock picks Company reviews Basic financial concepts Investor profiles Investment ideas Current events Economics Behavioral finance And, ultimately, ways to become a better investor I want to note the importance of the way I use value here. It’s not the simplistic definition of “low P/E” stocks that some financial services lazily use to classify investors, which the word “value” has recently morphed into meaning. To me, value investing equates to the term “Intelligent Investing,” as described by Ben Graham. Intelligent investing involves analyzing a company’s fundamentals and can be characterized by an intense focus on a stock’s price, it’s intrinsic value, and the very important ratio between the two. This is value investing as the term was originally meant to be used decades ago, and is the only way it should be used today. So without much further ado, it’s my very good honor to meet you and you may call me…