The U.S. stock market is inching closer to pre-pandemic levels, reports the Wall Street Journal. Analysts suggest the trend of countries reopening their economies, as well as promising trials in the development of a COVID-19 vaccine, are behind the gains.
Some caution that markets are still changing rapidly, however. On May 28th, stocks dipped again due to fears of hostility with China, according to Markets Insider.
Black Americans, hit harder by the pandemic in every conceivable way, haven’t been as hurt by the stock market’s crash as a result of the pandemic - as they tend to be far underrepresented among stock investors.
On the surface, this appears to be a silver lining. But is avoiding the stock market a mistake?
Black Americans invest far less money in the stock market than whites, according to Investors Business Daily. There are many reasons for this: hesitance to invest in a risky, white-controlled system, fear of losing one’s investment in an economic downturn, a lack of capital to invest, and a lack of Black role models and guidance.
The fears may be well-founded. Merrill Lynch, for example, paid out $160 million to settle a racial discrimination lawsuit in 2013, and Lauren Simmons made waves recently as the only woman, and one of few Black stockbrokers, on Wall Street.
But if Black Americans want to build wealth, they may have to push past those fears.
Despite these barriers, Black Americans are missing out on one of the best ways to build wealth in America, says Lazetta Braxton, a Black wealth and investment manager, in a recent op-ed for CNBC. “If wealth is a household objective in [B]lack communities,” she argues, “the stock market should absolutely be considered.”
She suggests Black Americans research the stock market to allay fears about its risks, look into Black wealth managers and financial advisors, and think about joining an investment club.
The pandemic may actually present a unique opportunity for people who traditionally don’t invest in stocks, like Black Americans, to break into the field. Many stocks are at the lowest prices they’ve been in decades.
According to Tiffany Aliche, also known as the Budgetnista, now could be a great time to invest, as she explained in a recent article on CNBC. Some other financial analysts agree, estimating that the billions of dollars put into the economy from the recent stimulus bill - and potentially more, if the HEROES Act or a similar bill passes - will show up in the stock market soon.
Daniel Kline of The Motley Fool and Forbes’ David Rae argue that it’s always a good time to invest, as long as one takes a long-term view.