Black Enterprise; Guide to Investing By James A. Anderson.; 2001

Review

by

Sampson Iroabuchi Onwuka

@ John Wiley and Sons

Reason why investing in Black/Africa may be lucrative.

A book of this nature is not generally a book of all seasons. For a man who prides himself as the leading expert in Blacks in Business, Wall Street and Investing, the book is half the apple. I shall indicate that writing any reason of the Blacks in economic community of these United States or in the general business of the world, usually takes time. Here in this case with Anderson’s ‘Black Enterprises’; Guide to Investing, there is a lot of information that may prove important to new people in investing in the U.S, and in the categories that may be called International, the book throws good light on general possibilities associated with Black business investing.

For instance, we may not have mastered the difference between a closed end investing category of the international and open end investing category. But from this man’s book, we learn that one "Closed end hold a portfolio of investments and rise and fall according to market conditions. They have a limited number of shares, and trade like stocks n the New York Stock Exchange"
 

This statement may seem unusually ambiguous to the enabled degree that some of the changes in the stock market since the Archipelago and the world market Vanguards, has given the Stock market a whole new make and has increased the investment alternatives that does not necessarily subtend with closed and open ends stock registrar.

 But the point is not missed that when investing involves elements of International or Cross Border financial engineering, it is promoted along the danger lines involved in placing private bets on this companies or playing a good card off the preferred stock if the means calls for it. In some sense, there is close end because of the Safety Net, where as many American Companies will register with Nasdaq or S&P 500 tailored different for American Companies operating in the Americans only, there are other versions of these companies that involved elsewhere and these registry are different and require some kind of Safety nets along the lines bonds which is a kind of investing.

In treating the subject on closed end funds, the James Anderson mentions that “Often enough, closed-ends funds trade at a premium or discount to their Portfolio's value, measured by the fund's NAV or net asset value" This is to set the pace that Internationals may be looking to sustain the role of investors by given a near guaranteed discount which enabled an investor earn at least his or her money back, and may even guarantee a form of profit if only there is a company that may have enough to place on a foreign basket or essentially on a lay. In common reality, there are only a few countries in the world where returns on Investment may challenge or top sale the Americans, and there are also few countries that may be a preferred destination for American Companies on a long term basis than the U.S.

This does not mean that all companies in U.S and marking better profit than Internationals, rather it goes to show that some Banks such as Bank of American and their Business outfits may be Safe in (uncertain markets) - insubordinate to investor sentiment, so holders have degrees of safety Nets, that may not by affeted by overnight dumping due to change in the market -international/world market


Here, Anderson does not only show how these companies and investors operate, he  throws light on some of the markets which should be doing better for instance, African Markets such as those in Zimbabwe, which does not. In this case, only a few companies may be successful in finding its meaning in African Countries and sometimes the attention and few may be over-stay, especially in African Countries riddled with military uncertainties that sometimes it tends to affect market condition. Closed ends would mean that such sector of the market such as oil or crude oil, industrial mining of Gold and precious materials, may be a sector only available to certain resources and long term investor interest.

That “close-end' is like the name closed, is not open to others, (diversified) involves real time magnet....”, yet anyone comfortable with long term investment should be looking to get some advisement on Closed End categories. And the author also warned that these so called these so called that carry Safety Net, usually don’t have much yield, a theme no less similar to long term investing in U.S, but for Internationals sake, we use closed end, that is people are looking profit from a low end, as such ROI; Return of Investment is relatively low.

Examples of Closed ends in Africa, at least operating as at 2000 include,
(1) Stanley Dean Witter African Fund (Up only 3 percent between 1997 and the end of 1999)
(2) Southern Africa Funds (which managed to rise 31.4 percent in the period between 1997 and the end of 1999).

Some of these companies since the coming of Euro and the subsidies offered by European companies are no longer operating, some of these companies have been acquired by others, for instance in South Africa where the mining industries under the De Beers Dutch family has maintained monopoly for almost a century in mining, make it a point of business interest to appropriate State Companies for their own investing ends. Of course, there is nothing wrong with this effort but it needs be understood that Banks such as Chase or Bank of America may not have strategic interest in Africa without the direct aficionados of a business enterprise such as De Beers in either South Africa or any country where there is a large percentage of precious metals and in such instances these, some of the registered African Companies operating as closed end businesses like the ones above, may become part of a publicly traded company with different Insurance backing and Safety Nets.

                                                             II

Anderson however mentioned that "Your other choice (open end), which is far less diversified and therefore far more risky, is picking up shares of a company, traded as ADRs in the United States. Most ADRs are sponsored, meaning that they provide U.S investors reports and information much as domestic companies’ world" Here as opposed to closed ends, the author indicated that events can determine the life of a stock market in open end categories. The name look exotic, but it deals with happens to a market when companies are officially trading and when it reacts to the pressing economic conditions. This sort of change take place “2- 3 days a week, a few hours, volume can mean price escalations”, it reflects on the stock of the investors.

Investors seeking to take a position on the open ends may be advised to stay local since the connection to execute a trade by the broker is better managed by the investor acting in any economy, for instance, an American in America. But here also, the author emphasizes that the world markets are stabilizing, not only in Europe but also in Asia, and African and Central Americans are not far behind. As such people can lose money in African Markets as well European markets and that these require the right crop of investors and interest. 

One of the ‘open ends’- The Calvert New Africa Funds - Shed a lot in 1990 and there is reason to believe that the company may have been de-registered from the US. Here once more, it is not common to find companies registering in the U.S in one year and then they go down the next year. This fact is better understood from the position of an International Companies seeking to make it to the Americans would have gotten some exposure before leading its investors to U.S open markets. In such, it is better to have funds from U.S or Europe participating in an International market like most African, or in BRICS market such as Brazil or China, which are challenging U.S interest in nearly every capacity

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In countries such as South Africa which is both a BRICS and a International, alignment of foreign Funds from A listed country such U.S may be placed within the precious metal industries of South Africa, largely for the fact that the controlling factors in this country are U.S and Europe sensitive industrial factors. Such companies as De Beers may not exactly serve as the right on choice given their of influence of Africa’s biggest banks, including Stanbic (probably the most powerful or they say, most stable Bank in Africa), yet there are foreign companies operating in Africa that are more than a bleep in the World Investing Cloud.

And going by Anderson’s argument, some of these companies with mainly Black community drive-in operate already made financial instrument, tailored from the needs of people unsure of their investing leniency to those seeking to understand African International Markets such as South Africa. But these individuals and companies are not small matter and run open market enterprises subject to International regulations and those of the United States. But like most "Money managers will tell you that the logical next step in their business is the "retail" or mutual fund market, the part of the industry that caters to individual investors"

In reality, there are threshold in business that must be met and sometimes there are losses but every loss in the market there is also an opportunity for profit. In common reaction to the days of Apartheid in South Africa, it should be maintained that these business experts are only so named, largely for their endurance and ability to help investors in open ends markets and in closed ends, and also helping individual investors, which in Anderson words as at 2000 may sound like a well – laid plan but it does not mean that some of these measures at still useful, for sure, many African Americans are trading everyday and without help, but the emphasis on the Black Community a form of self-generating market may be outside the framework of these sales managers. 

Anderson’s book, we learn that some of these individuals as we said before includes, John Rogers, Ariel Growth (1) Lou Holland (2) Eddie Brown (3) Maceo Sloan, and as a point raised by James A. Anderson, nearly all of the above survived all kinds of businesses setbacks including the 70’s and 80’s when it was not very easy for Blacks in general to break into Wall Street, with lines such as "draw up business" "stumping" "Airport Layover" "glad handing" "sales pitches", which are applied to business investor and particularly these individual no financial backgrounds.

Sources of information includes 'Morningstar's Principia database has 164 Fidelity Funds, for Thunder Clap short duration Agency Bond will key in on U.S Agency with an average of 2 years or so and from his description, "Ariel Capital's Ariel and Ariel Appreciation Funds specialize in mid-cap stocks, the kind Wall Street doesn't keep the closest tabs on. Lou Holland's Holland Growth Fun focuses on Growth Stocks, but only if they’re reasonably priced. The Edgar Lomax Eley, sticks to large cap stocks that sell at a discount to the broad market."

Black industries Investment

(1) Barbara Bowles of the Kenwood Growth and Income Fund, 

(2) John Rogers and Eddie Brown pension Funds, money for corporations and Local Government"

Randall Eley>Edgar Lomax Value Fund dubbed by Louis Rukeyer "perhaps the best money manager you've never heard of."

We continue   

Clifford Mpare one of the advisers of African markets was one of the few individuals mentioned in the book, it is with the view of helping businesses interested in not only trading African Waters, but African companies doing business in U.S. Of course any business venture between outsiders and Americans and new comers in business unaccustomed to the relationship between Blacks in America and the Caribbean from the 50’s and 60’s, and how these people in the effort to create a required and a lot of the information need to be updated.

It is clear that book emphasis the business of the American Blacks such as Luo Holland and Ariel Brown, it sowed the seeds of interpreting black businesses as ventures that can take a long of energy and a lot accounting and training to crack. There is nothing in this book that deals on continuity and institution, which I feel would have placed the reader at the background on the source or revenue base and allow them to exercise the reserves as Blacks in Wall Street out of which they can easily indicate that 

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1) Political upheavals for instance in Zaire, Rwanda, and Nigeria. 

(2) Zimbabwe (?) (3) Botswana , may or break any investment, but when there is a proven 34 billion barrels of oil in Nigeria and that Gabon and Ghana has Crude Oil, African American should not play a deaf ear to their interest in United States here and Africa.

Johannesburg with close 400 (500 in 2013)  billion dollar capitalization, is possibly the 7, 10, or 11, biggest market in the world should also interest would individuals ready to make money this business. The Rand devalued due to political themes associated (1) (Local/social...local markets. there is slow the issue of credit0 in both Thomas Mbeki and Azuma's presidency, especially the plans to empower the blacks with an 18 billion Re-Investment Act, which is supposed to enable their do well in business.

Potentiality is Nigerian is the biggest African country and market but South Africa and Egypt is shown by stress to be better placed. Real Estate in Africa is probably associated with Egypt, crude oil is associated with Nigeria , so also the removal crude oil subsidy. There is a concern for closed end, population driven markets in Africa because of the military tension arising from Terror groups and those in Agrarian coast line, but it terms of banks durability, investors usually Morocco ahead of Nigeria but these may be though the requirement than stability from experience for at least we know that South Africa is still a leader in Bank and Bank NOTES. Egypt, is a reference to real estate, where as Kenya is a booming market but quite expensive for would be investor, and there is also the issue Zimbabwe which is one of the best markets in the world, still teaming with new found crude oil reserves and new mines for precious materials.

Critic

While business of investing is the business of the investor, we are treated to some classic relativity of Anderson and investors with African American leniency. We are at once impressed with the collection of experts and their trials, but it will not be the first time that Black Stock Brokers has reached out to the general public and the general investing crowd. If the author had shown the good side as well as the bad the side, it will make a more interesting book. There are stories about these Black Business men and women, some of whom from Africa who got involved in community development and when the attention was given to them, they absconded after receiving the deals and other enhances.

There are cares of African Americans in Business, not just in business in U.S but elsewhere such as the Caribbean and as soon as the business went awry these people packed and left. There is a well known history of the fracas between Marcus Garvey and W.E.B DuBios concerning the investment of African American churches and some people with money and a result of the competition between Garvey and Dubios, the rubber plantation investment in Liberia became a total disaster. It is now known or at least suggested that Dubois may have  had a hand in Garvey’s disastrous business enterprises although there were others working for the then FBI under Edgar Hoover, some of whom engineered the downing of Marcus Garvey and some of whom did not respond to his captivity in Switzerland or thereabout and in the end, Black Investors lost a large portion of their business.

The author did not mention that African American businesses do not have a form of rating system to fully access the performance of these would be investors and why we can trust their job operative. The author did not mention that the Banks play a large role in determining the business environment that can and do sport bad business. They author did not write about the role of television and its positive value on black consumers, result is that the only daughter of Madam C.J Walker did not hold on to her mothers progress and earn a reputation like others such J.C Penny and Sam Walmart. Her daughter may have helped revival of business in Harlem and why there was renaissance in Harlem, along with George Schuleyer ‘The Sage of Sugar Hill’, but it was both the lack of foresight from her or her colleagues and other black investors that also contributed to the downfall of Harlem.

The author also failed to promote African business History which will help investors gauge the nature of business in West Africa and find how to proceed.

For instance the South Africa which is his real attentions, Investors would have been happy with the names of the companies operating the tough waters of South Africa, yet investors and would be investors of particular black descent would be better helped with learning that South Africa is the world’s largest repository of manganese – up to 80% of it, South African is also the world’s largest reserves in Platinum and in Chromium, where they have at 68% of all proven Chromium and Platinum anywhere in the world. And South Africa has 53.7 billion of the world coal reserves.

According to J.Tyler Dickovick ‘The World Today Series; Africa’, investors would have pleased to learn that South Africa world gold product since 1977 has dropped 14%  and it is down 80% since 1930’s and has shed a half a million jobs. Apparently gold on the global macro is not looking that terrific. The book maintained that there are other problems still associated in South Africa that 95% of all the precious metal industry, especially Diamond, is run by Whites, 65% of the Platinum run by Whites and 51% or thereabout run Whites, and to the author, it was not surprising that South African Government has initiated the BEE; Black Economic Empowerment, in 2004 alone, one South African Company called De Beers combined to mint 13.7 million carats of Gold  

    

Conclusion.

There are reasons why studying the economic condition of African Americans is important.  By studying the evolution of business in black America and the challenges facing them from within and outside, an investor or a broker may score some profit on any number of interest in Black Community.  Black community as a market entity is difficult to analyze with the help of people James A. Anderson and without the corporation of financial publishers such as John Wiley and sons or Bloomberg Associates. In the time past, Salmon Brothers were able to effectively compute the chances for investors interested in Black Communities, some of which were largely driven through and around government programs and incentives for minority.

At the moment there are several schools of choice that are working around the year calender towards upgrading the appropriate information from sources within the Black Community, and these schools include, University of Wisconsin Madison, University of California, Los Angeles Center for Afro-American Studies, and others who are presidential on matters of Black Business Investment and are working from the more general U.S Institute for Research on Poverty – which was at some point part of Policy Analysis series conducted by Timothy Bates and William Bradford. These important groups focused on Black Business and Investing and made recommendation on how ‘to give Blacks greater economic self-determination’, especially the Federal Reserve Reports on these items and Hunts Commission Report on the general condition of Minority Businesses, particularly blacks.

In all probability, the Black Community and the consequent African Diaspora industrial and financial collective such as Black Business Networked or paper organizations such as Black Business Reserve Groups, would have at least a quarter of century to re-organize the studies on African American businesses and investing priorities since in this day and time, Black Communities are counted as general American business community.  But this is not how the world is currently operating, and the whole idea of being Black for instance in the U.S, may not be appreciated by precisely white-washed young generation, some of whom are completely nowhere in the overall business community of the Americans and having real time problems  understanding or accepting it.

While there are investing opportunities in American, it is the view of an expert that Black Communities investing in Black Communities and without the notion of Charity or on behalf of some uncle Tom or Uncle Sam, will help restore the ruined privileges of been a Black Male or Female, or being an African in Diaspora, to the point that the leaking areas of American Business may have some injection from these patronizing of Black businesses – at any length – and help to reduce the dependency ratio of the African Americans on goods and businesses that literally transform the others. In this book by Anderson, there is renewed expertise knowledge and informational ‘share’ regarding the operational dynamics of notable African Americans investors.

Here it must be said that these group listed at the end, are the not the only groups operating with due respect to African American Communities or are their services any good or better than the wider American. But it’s a point to be made by the investor community and how they fare with Night of Madison Street. What Anderson also tried to show is that the success of these people did not arrive from doing nothing, that nobody offered these gentle men and some of them women a given chance to succeed and their story serves as a kind of encouragement if nothing at all.

The case of Ariel Brown is that is trial and triumph begins and ends with effort to get South African business men and women into his portfolio. He was not the only one, there was also Lou Holland, who even spent nights in his car waiting for a client arriving from somewhere in the country. These hunters – no different from hedge hunters today – lived in the time it was not easy for Blacks to be trusted with other people’s money unless they are well proven. Perhaps due to the times in which they lived, these would be revivalist of Black Wolves in Wall Street literally forced their way into the game.

Of course, we can discuss that these are primarily T. Rowe Price and his influence in Baltimore and IRA funds, but it is the effort and the understanding that a business is a community or community is a business that now lead non-blacks to give their money to these men.

   

Notable African American Mutual Funds

(1)    Ariel Application Fund (CAAPX) – Arielfunds.com

(2)    Ariel (ARGFX)  –  Arielfunds.com

(3)    Brown Capital Management Balanced (BCBIX) – www.browncapital.com

(4)    Brown Capital Management Equity (BCEIX)

(5)    Brown Capital Management Small Company (BCSIX)

(6)    Edgar Lomax Value Fund

(7)    Kenwood Growth and Income (KNWDX)

(8)    Lou Holland Growth (LHGFX)

(9)    MDL Broad Fixed Income (MLGEX)

(10)Profit Value (PVALX) – profitfunds.com

(11)Unity Fund

(12)Victory Lakefront

(13)Sub-Advised Funds; Calvert New Africa (CNAFX) calvertgroup.com

(14)Dreyfus Premier Third Century Growth Investors (TWCGX) dreyfus.com

(15)American Century Growth Investors (TWCGX) americancentury.com

(16)Globalt Growth (GROWX)

(17)Seligma Common Stock (SCSFX)

Investment Group

(1)    Coalition of Black Investors (COBI) cobinvest.com

(2)    Association of Individual Investors (AAII) aaii.com

(3)    National Association of Investors Corp (NAIC) better-investing.org