E-mail a friendJohn Rogers
airdate April 15, 2005
At age 24, with his economics degree from Princeton and just two years of experience, John Rogers founded Ariel Capital Management. The Chicago-based money management firm is the first minority-owned company of its kind in the U.S., with a client list that includes Wal-Mart and PepsiCo. Rogers discovered the market as a child when his father bought him stock instead of toys. He's a contributing columnist to Forbes, serves on several corporate boards and dedicated to 'giving back,' especially to economically disadvantaged children.
John Rogers
Tavis: We continue our "Road to Wealth" series tonight with John Rogers, founder and CEO of Ariel Capital management. His company is the largest African American owned money management firm in the country. A couple of personal facts about John Rogers: He was the captain of the basketball team during his days at Princeton and his father, John Rogers Sr., flew more than 100 missions during World War II as a member of the famed Tuskegee Airmen. John Rogers Jr. joins us tonight from Chicago. John, nice to have you on, man.
John Rogers: It's great to be on.
Tavis: Glad to have you here, even on tax day. I guess a lot of people get--it's not a good day for a lot of people, is it?
Rogers: No, it's not. I'm real worried about it myself.
Tavis: Yeah. Before I get into the money matters and continue our 'Road to Wealth' conversations here, I mentioned a moment ago that you were the captain of the basketball team at Princeton, and I've heard a story floatin' from Chicago all the way to L.A. that you recently played one on one with one Michael Jordan, and that something interesting happened in that one-on-one conversation. Can you share?
Rogers: Well, I was at his fantasy camp in Las Vegas and had the good fortune to be able to beat him in a short game, 3 to 2, and be the first person in, I guess, in the camp's history to actually have a chance to beat him. But I...
Tavis:
Rogers: To be honest, I think, you know, he took me for granted, and by the time I played him, John Thompson Sr. said I'd waited till he got really tired, and then I went up to play him.
Tavis:
Rogers: I do.
Tavis: Yeah. As a matter of fact, I think I hear your cell phone ringing right about now--now that Michael's heard you put that out there publicly.
Rogers: Oh, no, no.
Tavis: Yeah, yeah, yeah. All right. So talk to me about why mutual funds are such a good idea.
Rogers: Well, I think mutual funds are a great idea because you get professional management. You get somebody who spends their life thinking about what stocks or what bonds to buy, and we have that full-time professional managing your money, you should get better results.
Tavis: Let me just back up, though, and ask--explain what mutual funds are. For those of us who are trying to learn all this money lingo, we hear these terms all the time; don't exactly know what they are. So let me just back up and talk about what mutual funds are to begin with.
Rogers: Well, mutual funds are used for all asset classes from real estate, international investing, stocks, bonds, what have you, and it's a way for individuals to pool their money and then have enough money pooled together to have enough assets where, therefore, they can afford to hire a professional money manager to manage the money. So that's the basic concept--that you get someone who's really experienced who's going to be able to make the right decisions with your hard-earned dollars.
Tavis: All right. So that's what you do. So a group of folk get together. They've got some money they want to invest. They call Ariel Capital Management. They get you or somebody on the phone. You have an investment strategy to make their money work for them. Talk to me now about your personal investment strategy.
Rogers: Well, our strategy's always been around patience. We think the best way to make money is to buy stocks while they're out of favor, while they're low priced, and hold them for the long run, and over now the 22 years we've been in business, that's been our focus. We try to find these companies often when they're smaller or mid-sized, and, again, try to find them when maybe others aren't excited about them and they're not on the front pages of all the newspapers and magazines. But there's a real opportunity to find a great business at a bargain price.
Tavis: 'USA Today' Newspaper just named you guys as the all-star mutual fund. So you're doin' somethin' right over these 22 years to get 'USA Today' to shout you out in that way. Let me go back, though, to your strategy where you say that your strategy's based upon patience. We live in a world where people want everything and they want everything now. What kind of difficulty do you have, if any, in trying to convince people to invest for the long term? That seems to be, again, so antithetical to the way we live our lives these days.
Rogers: It really is very, very difficult, and especially at times when the markets are real strong like they were in the late nineties before the bubble burst.
Tavis: Mm-hmm.
Rogers: People didn't want to hear about patience and buying a stock for the long run. They wanted to figure how to get rich quick, especially in the Internet stocks and the technology stocks. But our logo's eternal. We try to remind people that that old Aesop's fable really is true that slow and steady wins the race. So we keep pounding it home over and over again, and hopefully, we can convince people that that's the best way to invest.
Tavis: Speaking of the turtle, did you figure that out when you started, or did that idea came to you later on?
Rogers: We started with the turtle right in 1983 when we founded the firm. We had a newsletter, and we called the newsletter 'The Patient Investor,' and I got the idea that the best way to, you know, symbolize patience was with the turtle.
Tavis: Mm. Tell me what kinds of investments you avoid making.
Rogers: What we try to avoid are the really risky companies. Companies that are doing new things for the first time and you don't know whether they have the staying power to last, a tough economic cycle or, you know, they lose a big customer. We try to stay away from also industries where there's lots of change where you could have rapid obsolescence. So someone who's invented a great new concept today, you know, someone else might get a better concept tomorrow, and you're out of business. So you don't see us in a lot of the high-technology fast-changing part of the economy.
Tavis: Mm. Tell me, then, some companies that you have your eye on.
Rogers: Well, especially on tax day as is appropriate, we've been buying H&R Block. You know, about 15% of America's taxpayers use H&R Block. You know, it's got a great brand and a good, consistent customer base, and that's one of our favorites. We also like media stocks, and we've been buying a lot of 'The Tribune' lately. You know, here in Chicago, there was a lot of hope that not only would the newspaper do well and WGN would do well, but we're hoping those Cubs will finally win the World Series and 'The Tribune' will be very, very successful.
Tavis: Yeah, from your mouth to God's ears on behalf of all the Chicago fans. I guess the question is have they gotten over that outfield play a couple years ago? Are they over that yet?
Rogers: I don't think they're over it yet, and hopefully 'Tribune' will get the right team in play so they can win.
Tavis: Yeah. Let me shift gears ever so slightly here and ask you how an African American such as yourself got interested in the investment game and how you believe that you became so successful at it? And I ask that because there is still this ridiculous belief that so many have that African Americans and money just don't mix.
Rogers: Well, I was really fortunate. You mentioned my father, and he's 86 years old. He was a Tuskegee Airman, and he felt that it was important to expose me to the stock market as a young person. So every birthday and every Christmas after I was 12 years old, he bought stocks instead of toys, and at first, that wasn't a lot of fun. But over time, I started to enjoy the dividend checks that came from those investments, and it just became a passion of mine. I had a broker here in Chicago, and I had a broker across the street from campus at Princeton, and it was just sort of a passion, and so I think if you start early, and you get consumed by something, you can be successful at it, and that really set the stage for me.
Tavis: We live in, as you well know, the most multi-cultural, multi-racial, multi-ethnic America ever. I know that you are a sought-after speaker by persons of color who are interested in getting into this business. Are you seeing that there are more people of color who are looking at the financial services industry?
Rogers: I'm seeing a lot of interest in investing, and, you know, people like Reverend Jackson and other leaders are really going out and trying to get churches and universities and schools to talk about the stock market. We have a small school in Chicago called the Ariel Community Academy, and we have a saving and investment curriculum built into the school to help show kids the importance of investing and what it's like to own a stock. It's just really important that we get exposed to the markets and then, therefore, we really have a chance to grow and be successful investing.
Tavis: But African Americans and other people of color--and I don't mean to lump everyone together--but there is historical evidence that suggests that African Americans and certainly Hispanic Americans and others are afraid of the stock market. What can be done, what is being done about that? You see progress being made on that front?
Rogers: I think there is progress being made. I think that the 2 things you have to do besides getting public education systems to talk about the markets more and teach kids basic economics early on, I think the other thing is that big corporations that have 401k plans have to think about how they're communicating the 401k information to people of color, that they can't use the same marketing materials. They can't, you know, use the same kind of language to try to get these core concepts across because it often is uncomfortable for us. We're the first generation to have wealth, and, you know, we're not comfortable getting involved in the stock market right away.
Tavis: Never mind one's color. These days it is easy for one, I would argue, to not trust anything relative to the stock market, not trust anything that has to do with corporate America given all the scandals that we continue to read about. How much has that been a problem for you if at all?
Rogers: Well, it's definitely a problem. You know, every day you wake up and you look at the 'Wall Street Journal' and you wonder if one of the companies you're investing in is going to be under siege and have some kind of huge regulatory problem. You know, it makes it harder to sleep at night. It makes us feel that we have to make sure we're doin' our homework on the quality of the people that we're investing in.
Tavis: So for folk who want to learn more about mutual funds and figure that it might be something that they want to start investing in, perhaps given this conversation or other conversations they've heard or read about of late, what's your advice for people who want to learn more about mutual funds and what they ought to do to engage them?
Rogers: Well, I think you have to just read the basic business publications on a regular basis, you know, whether it's 'Black Enterprise,' whether it's 'Money Magazine,' whether it's 'Kiplinger's' or 'Barron's.' I think if you're reading about the markets, you'll learn a lot about mutual funds and get comfortable with the lingo and get comfortable with the inevitable ups and downs that occur.
Tavis: So what you're saying is, right quick, what the market is going to do in the short run.
Rogers: Well, I'm concerned right through now. Because Alan Greenspan is raising interest rates, and higher interest rates are never good for the stock market traditionally, and higher inflation rates are not good for the market. So I'm really uncomfortable and think it's a time to be cautious.
Tavis: He is John Rogers Jr., CEO of Ariel Capital management based in Chicago. As always, John, thanks for the advice and for the conversation. Glad to have you on.
Rogers: Thank you.
Tavis: Yeah, and I'm going to tell Michael--I'm going to give Michael your phone number.
Rogers: No, no.
Tavis:
Rogers: Bye-bye.
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