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Eddie Brown - Beating the Odds: Eddie Browns Investing and Life Strategies

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Eddie Brown Beating the Odds: Eddie Browns Investing and Life Strategies

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Beating the Odds is the improbable, inspiring autobiography of financial guru Eddie C. Brown, one of the nations top stock pickers and money managers. It details how Brown skillfully kept Brown Capital Management afloat through the dot-com bust, 9/11 and the Great Recession. Born to a 13-year-old unwed mother in the rural South, this African-American investment whiz created a Baltimore-based financial firm that amassed more than $6 Billion under management.

Brown delves into the profound heartbreak and disorientation upon the death of his beloved grandmother who was his surrogate mother -- and recounts how Browns moonshine-running Uncle Jake subsequently became the dominant adult figure in Browns life. His unflinchingly honest, easy-to-read memoir details how intellectual curiosity, abiding self-belief, hard work and divine providence helped Brown earn an electrical engineering degree, become an Army officer, and later a civilian IBM engineer. Readers will learn of the strife that ensued when Brown quit IBM to earn an MBA, leading to investment jobs that prepared him to start his own money management company in 1983.

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Copyright 2011 by Eddie Brown All rights reserved Published by John Wiley - photo 1

Copyright 2011 by Eddie Brown. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com.

Library of Congress Cataloging-in-Publication Data:

Brown, Eddie (Eddie C.), 1940

Beating the odds: Eddie Browns investing and life strategies/Eddie Brown.

p. cm.

Includes index.

ISBN 978-0-470-93662-7; ISBN 978-1-118-06132-9 (ebk); ISBN 978-1-118-06130-5 (ebk); ISBN 978-1-118-06131-2 (ebk)

1. Brown, Eddie (Eddie C.), 1940- 2. Investment advisorsFloridaBiography. 3. African American businesspeopleFloridaBiography. I. Title.

HG4621.B76 2011

332.6092dc22

[B]

2010053518

This book is dedicated to the memory of my grandmother, Mamie Magdalene Brown, a remarkable woman whose discipline, sacrifice, and unconditional love got my life on this planet underway in spectacular fashion. Grandma, youre largely responsible for the man I am today. I hope youve been able to bear witness to some of the things Ive accomplished since your untimely death, and I hope Ive been able to make you proud.

This book is also for my loving and highly intelligent daughters Tonya and Jennifer, as well as for their extraordinary mother. Sylvia, weve enjoyed nearly half a century of marriage and I love you today with the same intensity and passion that I felt during our college days. My most noteworthy wealth-building achievement has nothing to do with dollars and cents, because Ive been rich since the day you agreed to be my life partner.

Last, but certainly not least, Id like to dedicate Beating the Odds to my precocious grandsons Elias, Benjamin, and Darrell Jr. If you guys take nothing else from this book, I hope the following lesson sticks: If you carry yourselves with dignity and integrity and always give 150 percent to whatever endeavor you happen to be engaged in, I think youll all be impressed with how things turn out.

This is a true story, so a few names have been changed.

Prologue

Why me?

Ive asked myself that question a million times in the eons since I graduated from Howard University in Washington, D.C.

You see, someone I didnt know from Adams housecat decided to foot the total bill for my undergraduate education, enabling me to earn a bachelor of science in electrical engineering at the age of 20.

That generosity propelled a kid who once transported illicit liquor onto a path that saw me eventually create a multi-billion dollar money-management business.

Remarkably, my benefactors generosity came without provisos or conditions. There were no demands about maintaining a requisite grade point average, pursuing a specific major, entering a given field after college, or even forwarding sporadic progress reports while I was at Howard.

Id love to know what thought processes triggered the life-altering philanthropy set in motion by that mysterious white woman.

So in some ways, Beating the Odds is a paean to a now-deceased benefactor Ill always wish I had properly thanked for her largesse, but never did due to the obliviousness of youth.

My other reason for writing Beating the Odds is to tell a crackling good tale filled with valuable nuggets about life, the labyrinthine world of investing, and my successful quest to become a philanthropist in my own right.

Ill be dispensing hard-won lessons absorbed over the course of an existence thats presented me with some wonderfully gratifying twists and turns, as well as occasional heartache and heartburn.

Chapter 1

Who Says Talk Is Cheap?

You havent lived until youve had 10 minutes to persuade six total strangers to give you $40 million.

Its an incredibly intense exercise, one that definitely heightens your senses and crystallizes your thinking. Thats because each passing minute is worth $4 million.

And its a mission that Ill be embarking on in about thirty seconds.

My name is Eddie C. Brown and Im in the high-pressure, no-excuses business of managing other peoples money. Welcome to my world.

Not surprisingly, the eagerness, trepidation, and exhilaration buffeting my innards have me practically abuzz with adrenaline. Even though at the moment I appear to be casually strolling through a Sacramento conference room, I feel like I could just as easily be moon walking across the ceiling!

Onlookers see the approach of a bespectacled, nicely dressed gentleman who is the very picture of competence, confidence, and probity. At least, thats how I hope the six conservatively dressed businessmen scrutinizing my every move view me. I flew here from Baltimore to impress upon them the following: They cant find a more savvy and level-headed soul to safeguard their $40 million, while managing it in a way that yields even more money for them.

The year is 1990 and my audience is the investment committee of the California Public Employees Retirement System, or CalPERS. After I take 10 minutes to lay out my rationales and investing methodologies, then Ill have 10 additional minutes to sagely and succinctly answer whatever queries the committee members may have.

My Baltimore-based company, Brown Capital Management, has been in existence for seven years now and has $80 million under management. In the future, that figure will grow to be billions. But at this point in my corporations life, I could really use CalPERS capital, not to mention the credibility that an association with them will confer.

All I need is for the next few minutes to go according to plan.

The CalPERS team regards me with dispassionate, unreadable expressions as I march toward the U-shaped table where well be doing business. Theres no Nice to meet you and How was your flight? small talk as I stride toward my fate; only cool, evaluative silence.

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