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business Tuesday 13 OcTOber 2020
Stocks are soaring, and most Black people are missing out

By STAN CHOE ple with enough money
AP Business Writer to do so. "A house, I can
NEW YORK (AP) — Ameri- put my hands on that and
cans who own stocks are believe in that, whereas a
pulling further away from stock is just whatever some-
those who don't, as Wall one else tells me it's worth,
Street roars back to record and I just have to take your
heights while much of the word for it."
economy struggles. And Bob Marshall, a bank-
Black households are much ing executive in northern
more likely to be in that not- Virginia who is Black and
as-fortunate group that isn't does invest in stocks, said
in the stock market. differences in financial lit-
Only 33.5% of Black house- eracy education may be
holds owned stocks in 2019, one factor. Or, he said, be-
according to data re- cause fewer Black families
leased recently by the Fed- have wealth that has car-
eral Reserve. Among white ried through generations,
households, nearly 61% did they may be more wary of
so. Hispanic and other mi- risky investments.
nority households also are Even though the S&P 500
less likely than white fami- recently returned to a re-
lies to own stock. cord level, it lost more than
Many reasons are behind Banking executive Bob Marshall, an active stock investor, poses for a photo at his home in a third of its value in less
the split. Experts say chief Ashburn, Va., Friday, Aug. 7, 2020. Associated Press than five weeks before
among them is a long- that. That's part of the im-
standing preference by grow over time. In general, The most important may be Instead of stocks, wealthier plicit bargain in investing
many Black investors for they have lower incomes, the restricted access Black Black households are more in higher-risk, higher-return
safer places to put their which leaves less money borrowers had to mortgag- likely to own safer invest- investments.
money — the legacy, some to invest after paying bills. es and affordable housing ments, such as bonds, life "There isn't a passing down
say, of decades of discrimi- Many also work jobs that through decades of redlin- insurance or real estate, of knowledge from gen-
nation and fear. Also, many don't offer retirement plans ing and other discriminato- said Tatjana Meschede, as- eration to generation," said
were never taught what like a 401(k). ry practices, said Raphael sociate director at Brandeis Rogers, who founded Ariel
they were missing out on. But researchers say that Bostic, president of the Fed- University's Institute on As- Investments in 1983. "It's
"We didn't have a grand- even wealthier Black eral Reserve Bank of Atlan- sets and Social Policy. the opposite of what I hear
father or aunt or uncle or households are much less ta, in a recent speech. The largest bond fund has from Warren Buffett about
mom and dad educating likely to own stocks than Researchers say increased returned less than 40% over the magic of compound
us on the markets because their white counterparts. investment by racial mi- the last decade. That's far interest and how much
they didn't benefit from it That means they missed out norities in the stock market, below the nearly 257% that wealth has been created
because of historical dis- on the roughly 260% returns carried through future gen- the largest stock fund has since he was born. Those
crimination in this country," for S&P 500 funds over the erations, could help narrow delivered over the same kinds of stories don't hap-
said John Rogers, founder last decade, and the re- the wealth gap. Toward time. Real estate has also pen in Black communities."
and co-CEO of Ariel Invest- sulting chance to see their that end, industry groups had slower gains. Rogers had a different ex-
ments. wealth grow. are trying to encourage Malcolm Ethridge, a finan- perience in part because
Black people have also of- Lower rates of stock owner- more Black people to be- cial adviser in the Wash- his father introduced him
ten lacked the opportunity ship are a small reason for come financial planners, ington area, regularly sees as a kid to a Black stock-
to build up wealth, park it the wealth gap between who could then draw in a reluctance to invest in broker, who became a role
in the market and watch it Black and white families. potential investors. stocks among Black peo- model.q

Mallinckrodt, ensnared in opioid crisis, seeks Chapter 11

The Associated Press ment to avert hundreds said. The company did not
A New Jersey drugmaker of lawsuits. It said Monday immediately respond early
ensnared in the fallout from that it plans to amend the Monday to inquiries about
America's opioid crisis is settlement as it restructures. whether the amended
seeking bankruptcy pro- Under the proposed settle- deal affects the amounts
tection. ment, opioid claims would individual plaintiffs may re-
Mallinckrodt said Monday be channeled to trusts that ceive.
that it had begun Chap- receive $1.6 billion in struc- Trading in company shares,
ter 11 proceedings to re- tured payments. Claimants which dipped under $1 for
structure debt and resolve also would receive war- the first time this month as
"several billion dollars of rants for about 20% of the investors bailed out, were
otherwise unmanageable company's fully diluted out- halted at the opening bell
potential legal liabilities." standing shares, the com- Monday. The stock went for
The drugmaker, one of pany said Monday. well over $100 just over five
the highest-volume opioid A court-appointed commit- years ago.
producers in the U.S. at tee representing thousands Mallinckrodt's path through This July 1, 2013, file photo, shows the exterior of the Mallinckrodt
the height of the nation's of plaintiffs in the opioid the bankruptcy courts fol- Pharmaceuticals office in St. Louis. Associated Press
prescription drug crisis, an- lawsuits will recommend lows that of Purdue Phar-
nounced in February a support for the amended ma, the maker of OxyCon- Mallinckrodt plans to slash and it will continue to oper-
tentative $1.6 billion settle- agreement, Mallinckrodt tin, last year. its debt by about $1.3 billion ate during the process.q