Home Money Investment Investment clubs add social aspect to playing the stock market

Investment clubs add social aspect to playing the stock market

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Tina Royster said she probably would have lasted two minutes in an all business, all the time investment club.

On the other hand, she has lasted 50 years in the Huguenot Investors, a group of 24 women that meets monthly to manage a stock portfolio that has grown to approximately $373,000. It would be worth more if the club had not paid out dividends over the years.

“We learn a little bit, but we have a good time and enjoy each other. I think that’s why it’s lasted so long,” said Royster, one of the original members of the club that held its first meeting in March 1968.

At the club’s February meeting, held at Westminster Canterbury just days after the Dow Jones industrial average plunged more than 1,000 points, financial adviser Stephen Spraker of BB&T Scott & Stringfellow offered steadying advice.

“There’s still the thought process that you should own good companies with good products, real earnings and real customers. That’s the name of the game, still,” Spraker said.

In an era when anyone with the money can go online and buy stocks, investment clubs add a social aspect to playing the stock market.

Nationally, the number of investment clubs seems to be stabilizing, said Adam Ritt, spokesman for Michigan-based Better Investing, a nonprofit organization that offers resources to investment clubs. Not all investment clubs are Better Investing members.

“We have new clubs joining every year. And we have probably more breaking up every year. But currently our association at year-end was around the 3,200-club mark. It’s certainly a whole bunch lower than it was during the heyday of the Beardstown Ladies. But in recent years, it has stabilized,” Ritt said. The organization had 6,800 member clubs in 2010.

The storied “Beardstown Ladies” was a group of older women in Beardstown, Ill., who formed an investment club and claimed returns of 23.4 percent between 1983 and 1994. Their calculations were later proven to be wrong, though not before they had written books on their investing philosophy.

“Clubs form mainly with friends, family, co-workers — that’s the big three. For a lot of these folks, getting together once a month is a great time for them socially. They are able to get a little investing in there, too,” Ritt said.

In the Richmond area and beyond, there are more than a dozen investment clubs — some all men, some all women, some both genders.

Rosemary Blackburn said the Fat Assets Investment Club formed in 1999 and was made up of Bon Air-area residents, most whose children attended the same schools. They started with 25 members but, after that first year, only 12 remained.

“Most just didn’t want to get bogged down with what we had to learn,” Blackburn said. “It is work, and it’s always a guessing game.”

The Fat Assets Investment Club purchases stocks every three months and currently holds 12 to 15 stocks, she said. A rotating stock selection committee makes buy recommendations. Every member is assigned to watch a stock.

The club’s holdings are valued at $150,000 to $200,000, Blackburn said. Most members are in their mid-60s, and there has been talk of cashing out.

“After 20 years, most of us have grandchildren, and you seem to get busier because of those grandchildren,” she said. “We have talked about taking the money and going on a big old vacation, but nobody really wanted to do that.”

Based on longevity, at least two area investment clubs have an edge over the Huguenot Investors.

The Colleagues Investment Club was founded in 1967, said Howard Crane, one of the original members. The Ticker Tape Investment Club was formed around 1960, said Milton Owen, a member since 1992.

Crane said the Colleagues Investment Club was started by a group of Virginia Department of Education employees who ate lunch together. Crane was a computer programmer with the department and has been with the club the longest.

“When we were first organized, the treasurer had to keep the records manually. So I wrote programs to do monthly reports,” said Crane, who served as club treasurer for a number of years.

The club meets monthly at a church in Henrico County and has a portfolio valued at approximately $231,000. Member monthly contributions are a minimum of $20.

“We own about 16 different stocks representing most of the investment sectors,” said Robert Almond, a 15-year member of the Colleagues Investment Club and a past president. The club has 15 members.

The Ticker Tape Investment Club has 13 active members, said Owen, a retired accountant who does the club’s monthly statements.

“I don’t know what brought them together other than a group of guys getting together and saying, ‘What do you think about this?’” he said.

As some of the partners have passed away, their wives have taken their place, Owen said. Club bylaws allow for a maximum of 20 members.

Owen declined to disclose the club’s portfolio value but did say it was over $1 million. Some of its best-performing stocks include McDonald’s, Microsoft and 3M.

A certified public accountant does the taxes for the club, which operates as a partnership, Owen said.

“It’s a pass-through to the partners. So the partnership ends up with nothing for the year, but all of the amount of the dividends, interest, etc. is distributed across the partners and they pay the tax on their individual amount,” he said.

Better Investing’s Ritt said a typical club has six to 10 members and has a portfolio of about $220,000. Clubs can be organized in various ways, but partnerships are probably the most common.

“The wonderful thing about investment clubs is that they provide a very supportive atmosphere for learning,” Ritt said. “So when the market goes down, you can kind of remind yourself why you are doing this. We all are investing for the long term.”

Even with last month’s market correction, Robert Passmore said most of the stocks held by the 11-member BoyzNiteOut99 investment club in the Richmond area are up this year.

The club was founded in 1999 and aims to purchase stocks growing in value in the 20 percent range, he said.

“We are more on the riskier side than you would be with your personal portfolio,” he said.

“Nobody is really betting the rent money,” Passmore said.

Ritt said the most popular stocks with the association’s member clubs include Amazon, Apple, Disney, Facebook, General Electric, Google, Johnson & Johnson, Microsoft, Starbucks and Visa.

The Winning Image investment club, which has 15 members and was founded in 1986 in Kilmarnock, “leans toward the conservative,” club president Carol Cole said.

“We try to keep diversified but, at the present, we are a little heavy in tech stocks,” Cole said. “This philosophy has worked very well for us and, in the last few years, we have been able to pay out a cash distribution to each member.”

Some key stocks the club holds include Apple, bought when it was $48 a share; Costco, bought at $62 a share; and Disney, bought at $32 a share, she said. Those stocks were trading late last week around $176, $185 and $104 per share, respectively.

Members who stick with investment clubs can grow a nice nest egg. The Winning Image members contribute $50 a month and through the magic of compounding, the portfolio has grown to a value of approximately $630,000, Cole said.

“We presently have a portfolio of 24 stocks. Through the years, we have owned shares in 240 different companies,” she said.

In most clubs, members pay a monthly fee, usually from $25 to $100, which is used for future stock purchases.

New members are usually recommended by someone in the club. Some clubs only accept a new member when one leaves, and the new member may be required to purchase an equal share.

Of the eight original members of the Golden Girls investment club, formed in 2001 in Colonial Heights, as many as three are still active, said Lynn Rogers, senior partner of the club. They have added new members, with a total of 10 members now.

“We don’t try to have proportional membership,” Rogers said. “When a new person comes in, if they are not able to come in on an equal basis, we have started a new portfolio.”

When someone leaves Huguenot Investors, they take 1/24 of the value of the 24-member club’s portfolio with them, said Jane Sisk, club president. A replacement member would buy in for that same amount.

“It keeps our value the same,” said Sisk, who paid $10,000 to buy in when she joined. Last fall, the joining amount was up to $15,500.

Tony and the Girls, an investment club formed in 2010 in Kilmarnock, formed after a previous club with the same name dissolved, said Sue Saunders, secretary/treasurer. The original club was a school employee named Tony, and the club’s members were mostly teachers.

“When the original Tony and the Girls dissolved, our buy-in was too expensive to get any new members,” Saunders said. “We decided everyone would take their money out of that, then we started a new group with people just paying $25 a month so you didn’t have a several thousand dollar buy-in.”

The club has 34 memberships — some members have more than one membership — and a portfolio worth about $138,000. The buy-in for new members is up to about $4,000, Saunders said.

“Amazon, Google, Boeing and Apple have been good for us,” she said.

Other clubs bring in new members for much less.

Richard Rose remains a member of the Blue Chip Investment Club of the Virginia Beach-Norfolk area, though he now lives back in his hometown of Richmond. The club has 20 to 25 members and a value of about $400,000, he said.

“I think the minimum buy-in is $2,500. They are not really buying into the value of the club. They end up establishing their own value by how much they put in. They get their percentage of the total that way,” Rose said.

Wendy Craig of the 19-member Carrsbrook Homemakers investment club in Charlottesville said the club prorates new member entry fees. It formed in 1971.

“When we started, everybody put the same amount of money in, but then it became so high as our investments went up, people didn’t want to put that much money into a club. So we now say it has to be $500 or 10 percent of our units. We have units like a mutual fund,” Craig said.

Clubs also differ on what they do with their earnings.

For instance, Francine Battle and her four aunts who make up the Margaret Ola Investment Fund LLC have taken trips, and they help pay education expenses of children in the family.

“We do not have a lot of money after 18 years. We use the money to give our graduates from high school and college a small stipend,” Battle said.

Brandon Ford said that at the River City Investment Club, formed in 2003 and worth $70,000 to $80,000, the club takes dividends from time to time.

“We will not take a dividend if it’s under $60,000,” Ford said.

The five members of the Smart Women Investing Money, formed in 2007, have never taken money out of their portfolio, which is worth nearly $200,000. But they have thought about it, said members Tracy deShazo, Julie Redd and Mary Pasco. Their monthly meetings are held at a member’s home in western Henrico.

“I think it’s more fun to watch it grow,” deShazo said.

“The problem we would have is what are we doing to sell,” Pasco said.

“Selling out and distributing it doesn’t even cross my mind, but I do like the idea of one day the five of us going on a really fun trip,” Redd said.

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