Many investors opted for the sidelines during the downturn in the stock market, but black investors sat out more their white investors, Dow Jones Newswires reports.

According to a study by Ariel Mutual Funds and Charles Schwab, only 61% of blacks polled in the months of January and February had money invested in the stock market. This is a sharp contrast to the 74% level in 2002. Stock ownership by white investors polled stood at 79%, down from 84% in 2002.

However, both black and white investors’ confidence in the long-term benefits of investing in the stock market has fallen. Among blacks, 46% said stocks are the right place to be long-term, down from 67% in 2001. For white investors, 62% said they believe this to be true, down from 82%

The survey was taken in 500 black households and 500 white households, and was conducted before the recent surge in the market, which began in March. The recent stock gains, bolstered by the tech sector, might be signaling that more investors will come in from the sidelines. For example, Schwab stated last week that revenue-producing trades have climbed from 20% in May from April and by 15% from May 2002

Mellody Hobson, president of Ariel, told Dow Jones that black investors will return, but probably not until the economy picks up and the unemployment rate drops. The unemployment rate for blacks is 10.8%, twice as high as that for whites. Hobson added that black investors, on the whole, are relatively new to investing and that this was the first major market downturn they’ve experienced.


The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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