Table of Contents

Cover

Table of Contents

Title page

Copyright page

Dedication

Disclaimer

Prologue

Chapter 1 Who Says Talk Is Cheap?

Chapter 2 The Big Three to the Rescue

Chapter 3 The Prince of Apopka

Chapter 4 Death and a Kidnapping

Chapter 5 Magnificent, Mysterious Lady B.

Chapter 6 Engineering a New Existence

Chapter 7 Europe on Five Dollars a Day

Chapter 8 “Ed, We’re Already Doing Okay!”

Chapter 9 A Famished Lion in a Butcher Shop

Chapter 10 The Height of Duplicity and Betrayal?

Chapter 11 A Window on the Top 1 Percent

Chapter 12 Pulling the Trigger on Investments

Chapter 13 Swimming with Sharks

Chapter 14 Aren’t You That Financial Guy From TV?

Chapter 15 Walking a Racial Tightrope

Chapter 16 “Go For It, Dad!”

Chapter 17 Everyone’s Medical Nightmare

Chapter 18 My Biggest Business Mistake

Chapter 19 A Horror Movie without Sound

Chapter 20 The Art and Science of Stock Picking

Chapter 21 “God, I Owe You One!”

Chapter 22 Impressive Progress, Baffling Lethargy

Chapter 23 To Heir Is Human

Chapter 24 Anyone Care for a Can of New Coke?

Epilogue

Index

Plates

Copyright © 2011 by Eddie Brown. All rights reserved.

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

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Brown, Eddie (Eddie C.), 1940-

 Beating the odds: Eddie Brown’s 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 advisors–Florida–Biography. 3. African American businesspeople–Florida–Biography. I. Title.

 HG4621.B76 2011

 332.6092–dc22

 [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, you’re largely responsible for the man I am today. I hope you’ve been able to bear witness to some of the things I’ve accomplished since your untimely death, and I hope I’ve 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, we’ve 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 I’ve been rich since the day you agreed to be my life partner.

Last, but certainly not least, I’d 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 you’ll all be impressed with how things turn out.

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

Why me?

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

You see, someone I didn’t know from Adam’s 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 benefactor’s 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.

I’d 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 I’ll 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.

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

You haven’t lived until you’ve had 10 minutes to persuade six total strangers to give you $40 million.

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

And it’s a mission that I’ll be embarking on in about thirty seconds.

My name is Eddie C. Brown and I’m 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, that’s 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 can’t 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 I’ll 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 corporation’s 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 we’ll be doing business. There’s no “Nice to meet you” and “How was your flight?” small talk as I stride toward my fate; only cool, evaluative silence.

Every one of my inquisitors is already seated and ready to get down to business. Wow—these boys are not playing! I can almost hear their thoughts as I smoothly set down my briefcase and prepare to sit myself. Is he really as good as his financial results indicate? Are we in the presence of a superbly trained, uber money manager? Or a potential time bomb who’ll make us look like rank amateurs?

Numbers don’t lie. My clients have historically enjoyed results that have beaten the stock market year after year. However, folks who entrust you with millions of dollars need to be swayed by who you are, as much as by what they read about you on paper. It’s time for me to become one of the financial industry’s leading purveyors of charm, expertise, and gravitas.

It’s time to sell the heck out of my brand.

No sooner does my backside settle into a chair at the conference table than a huge black digital stopwatch with big red numbers on it starts running. Taking note of that simple fact has eaten up two of my precious 600 seconds. This leaves me with nine minutes and fifty-eight seconds to convince CalPERS that I’m their man.

After the 10 minutes for my presentation have elapsed, the CalPERS committee will get an additional 10 minutes to ask questions. Given the amount of money at stake, naturally I’ve left nothing to chance. I know precisely what I’m going to say, as well as how and when I’m going to say it. I’ve rehearsed my lines ad nauseam and have literally timed them to the second.

So I let the verbiage I’ve chiseled into my brain start to flow, and also make it a point to swivel my head so that I can have eye contact with each CalPERS team member.

I start off by thanking them for this wonderful opportunity to compete for their business, and make it clear that I’m intimately familiar with CalPERS’ mission, its unique money-management needs, and am eminently qualified to comprehensively address those needs.

As I stop to take a breath, time continues to tick away. The unrelenting digital clock indicates that I have 8:33 left. So far, my spiel is going exactly as I’ve rehearsed it. I’m excited and revved up, but not nervous because thorough preparation always puts me at ease. Plus in a manner of speaking, I don’t feel like I have anything to lose—I’ve yet to gain the $40 million I’m seeking, so it’s not mine.

8:31. Time to launch into a brief history of Brown Capital Management and my 13-year background in the financial industry. This includes having worked for T. Rowe Price, having made regular appearances on the PBS program Wall $treet Week with Louis Rukeyser and having earned an M.B.A. from Indiana University. I even toss in a little Hoosier joke, to show these guys they’re not dealing with some humorless financial automaton, but an engaging human being they’ll enjoy interacting with.

6:47. Of the six CalPERS committee members, three are nodding and smiling faintly, two are expressionless and one appears to be disengaged for reasons that I pray have nothing to do with me. Without missing a beat I begin pulling out visual aids—charts and graphs—and segue into my investing philosophy, which I call GARP, an acronym for growth as a reasonable price. I’ve got everybody’s attention now, even my disengaged friend’s.

:10. After hearing only my voice for the better part of 10 minutes, I’m mildly startled when the investment committee chairman pipes up: “Mr. Brown, you have 10 seconds!” Smoothly summing things up, but at a lightning pace, I bring my presentation to a well-choreographed close. And then I take a much-needed breath.

That’s got to be the fastest 10 minutes I’ve ever experienced in my life. The digital clock is instantly reset to tick off 10 more minutes.

Incredibly, the second 600-second allotment flies by even quicker, as the committee members ask questions based on my presentation. Professional athletes often talk about being in the zone when they’re really on top of their game. Well, I’m here to tell you that financial professionals sometimes reach that same exalted place as we go about our business.

Before I realize it, 10 more minutes have flown by. I quickly collect my charts and graphs, give each CalPERS member a quick smile and a nod and walk away from the table.

The CalPERS team has several more money managers to interview who also want CalPERS to allocate $40 million to their firms. All of the hopefuls have survived a rigorous vetting process to make it to the interview round, and CalPERS has limited everyone to 20 minutes to ensure that interviews are handled quickly and efficiently.

I leave the conference room feeling totally at ease and satisfied with my performance. Whatever happens moving forward, I’ll know that I left no verbal stone unturned in pursuit of CalPERS’ $40 million. To use another time-worn phrase from the realm of athletics (my last one, I promise!), I left everything between the lines.

Now that my 20 minutes are over, I feel talked out. I call my wife, Sylvia, to let her know the meeting is a done deal, things seemed to go well, and that I’m on my way to Sacramento’s airport for a flight back to Baltimore. And then I get off the phone, perfectly content not to utter another syllable until I’m back on the East Coast.

Bottom line, a few weeks later I get the $40 million dollars I flew to Sacramento for. It was definitely a satisfying victory, and a well-deserved one for my 10-minute speech. Not bad for someone who used to drive moonshine-laden hotrods through the dusty back roads of rural Apopka, Florida, as a youngster.

As soon as the CalPERS money is wired to Brown Capital Management, I immediately call Sylvia and tease her that my time is now worth $240 million an hour, and she needs to treat me accordingly. Given that there’s no letup in the honey-do lists tossed my way at home, I guess my playful boast didn’t impress her unduly.

So was snagging the CalPERS account my greatest triumph thus far? Not by a long shot. My greatest triumph will always be the way my wife, our two daughters, and I were fortified by God’s grace to survive a cancer scare that rocked our tight-knit family to its core.

Don’t get me wrong—securing $40 million thanks to a well-executed 10-minute spiel is terrifically gratifying, and I remain very proud of that accomplishment. But money has never been my lord and savior. I’ve made lots of it in some fairly unique ways and have spent lots in pursuit of altruistic aims and objectives. All over the course of an existence filled with quite a few noteworthy scenarios and challenges.

Scientists love to argue whether nature or nurture is the main driver of human development.

During my earliest days on the planet, nurture clearly got the nod.

That tends to surprise people, because when I entered this world in Apopka, Florida, on November 26, 1940, I was the son of a 13-year-old unwed mother.

Folks furrow their brows when I disclose this, undoubtedly envisioning my youthful mom, Annie Mae Brown, balancing me on her hip as the two of us make our way through a cold, uncaring world. Interesting imagery, even if it’s off the mark.

The fact is that I enter this life immensely blessed, thanks to three bedrock adults who collectively make sure little Eddie Carl never wants for food, shelter, love, a solid work ethic, intellectual stimu­lation, adventure, and entrepreneurial training most M.B.A. students would envy.

I call these stalwart personalities the Big Three, and they envelop me in their protective embrace after my mother flees Apopka at the age of 15, no longer able to deal with the stigma of having borne a child out of wedlock.

First and foremost among the Big Three is my de facto mom, Mamie Magdalene Brown, my mother’s mom.

Dig into the backgrounds of most successful people who come from nothing and you’ll usually find a key person in the background whispering: “You’re worthy.” “You’re capable.” “You’re destined for greatness.”

That’s my maternal grandmother. A good-looking woman who is on the short side and plump, Grandma brings an abiding love and stability to my life the likes of which I haven’t experienced since her death. I will go to my grave adoring her.

Grandma’s stoic, hard-working spouse who’s 21 years her elder, Jake Brown Sr., is my father, as far as I’m concerned. A medium-sized man who’s bald on the top of his head, has salt-and-pepper hair on the sides, and seems to possess a million sets of denim bib overalls, Granddad isn’t big on verbalizing stuff like his feelings for me, or how I should carry myself in life. He just uses every minute of every day as a teachable moment and lets his actions convey what verbiage never does. I don’t think I’ll ever meet anyone with a purer devotion to work than Granddad.

He’s a laborer in one of Apopka’s many citrus groves, where oranges, grapefruit, and tangerines are grown. Grandma works as a laborer in a nursery producing philodendrons and other green, leafy plants.

After working brutally long days, my grandparents come home to their second fulltime job of being my parents. I’m often asked if my mother left a void in my life after she departed Apopka when I was two. No, because I was always awash in a sea of unconditional love despite her absence.

My grandparents have another child older than my mother— five years, to be exact—whose name is Jake Brown Jr. Uncle Jake gets his hooks into me a few years after my birth and encourages me to always view life differently than most people, and to never, ever, sell myself short. Uncle Jake also teaches me to unfailingly go after, and expect to attain, the very best life has to offer.

It’s Uncle Jake who gives me my first job and simultaneously teaches me how to drive not long after I turn six. He has a crew of migrant workers, primarily from Georgia and Alabama, who come to Apopka in early fall when it’s time for the citrus crops to be harvested.

These workers spend the entire harvest season living in five modest, wood-frame dwellings owned by my enterprising uncle. He farms the laborers out to the white owners of large citrus groves scattered around Apopka and is compensated very handsomely for providing seasonal labor.

Uncle Jake owns several trucks that are used in conjunction with the annual harvest, and teaches me how to operate one with its throttle on the dashboard, because there’s no way my short legs can operate the accelerator or brake pedals. As I drive the truck down the rows of citrus trees, dwarfed by the huge steering wheel I’m maneuvering, Uncle Jake’s workers take heavy boxes filled with fruit and dump it onto the bed of the truck.

I never get paid for my driving duties, which definitely enhances my shrewd uncle’s bottom line. But do you think I care? I’m six years old and successfully operating a truck! That’s reward enough in itself.

* * *

By the way, if you’re wondering where Uncle Jake and I get our entrepreneurial gene from, it’s my grandfather. At one point in his life Granddad owned 200 acres in a small town west of Orlando known as Ocoee, making him that central Florida hamlet’s biggest landowner.

He’s forced to flee for his life in 1920, in the wake of a voting dispute between blacks and whites that spawns a gun battle that leaves two whites dead. Afterward a white lynch mob kills nearly 50 blacks and burns down homes and businesses on the black side of Ocoee. Granddad relocates to Apopka, and he never utters a single word to me about his harrowing Ocoee experience. Nor does he ever display a scintilla of bitterness.

My innate passion for hard work didn’t come from my biological father, Jeremiah Williams, who was a nonentity in terms of my development. I had absolutely no interaction with him until I was much older, and when we finally did meet the encounter was such a nonevent that I don’t recall much about him, or even when—or where—we met.

He wasn’t that much older than my mother, meaning he was also young and immature when I was born, Unfortunately the passage of time failed to help concepts like “responsibility” and “accountability” make much of an impact on his carefree, responsibility-shirking brain.

* * *

The town where I was born, Apopka, is about 12 miles northwest of Orlando and is firmly wedged between Jim Crow’s talons during my childhood.

There’s a black side and a white side of town and pretty much zero interaction between the two except on Saturdays, when blacks walk to the white side of town to shop for food or clothes. The clothing stores have dressing rooms, but they’re for white patrons only. If you’re black and try on any article of clothing, you’ve automatically bought it!

It sounds like a cliché, but the demarcation line between Apopka’s two encampments is a set of railroad tracks.

The black side of town is without electricity, paved roads, and running water. That last omission holds particular significance for me, because it means I grow up having to use outhouses whenever Mother Nature beckons.

Even as a child, the notion of taking care of essential business inside a rickety, odiferous wooden shack that’s short on privacy offends my sensibilities!

I’m not sure where this “highfalutin’” outlook comes from, given the generations of black Southerners who’ve spent their entire lives dealing with the elements, ticks, spiders, and snakes whenever a bathroom visit is in order. But I can tell you that even now, I will not frequent a Port-O-Potty because of the flood of disgusting memories those smelly things unleash. Yuck.

Aside from shopping excursions, the only other time I spy whites as a child is during infrequent trips to Orlando, the big city, to visit department stores or to receive medical attention.

My youthful social antennae don’t pick up any antipathy or tension between blacks and whites, nor do I detect much curiosity about whites coming from my fellow black Apopka residents. We have our schools and they have theirs and it just seems perfectly natural that in a burg of only 2,000 people, blacks and whites have no contact with each other.

Part of Jim Crow’s sickness is the institution’s peculiar ability to anesthetize and desensitize, making the patently absurd seem perfectly ordinary and unremarkable.