Investment Clubs

squid3 said:

<< Anyone had any experience or success with an investment club? I have heard the idea mentioned numerous times and was curious to hear what someone thought about whether they were beneficial or not.

Thx >>

I've got experience for about three years now in a local (i.e., not online) club and in fact am it's current treasurer. We follow the NAIC (National Association of Investment Club) charter and guidelines. In terms of the second half of your question, it really depends what you mean by success. In terms of learning about evaluating potential investments I've had much success. Also have reaped great rewards in terms of just learning how to debate investments and have meaningful dialogue with others who might feel very different from myself. I've also made some good friends with people that I probably wouldn't have otherwise.

In terms of making money, no, there has been little success. I got involved just as the stock market as a whole tanked. We've stayed afloat and are pretty much breaking even at this point, which by the way is much better than my individual portfolio. So, in relation to that, I suppose it has been successful.

Hope this helps,
zender

The NAIC website is at www.better-investing.org. You're bound to find everything you're looking for there.

Good luck!

zender

I would suggest you run it past Tim, Chief Muck of FW. The forum's charter specifically says no stock tips.

zender said:

<<

I've got experience for about three years now in a local (i.e., not online) club and in fact am it's current treasurer. We follow the NAIC (National Association of Investment Club) charter and guidelines. In terms of the second half of your question, it really depends what you mean by success. In terms of learning about evaluating potential investments I've had much success. Also have reaped great rewards in terms of just learning how to debate investments and have meaningful dialogue with others who might feel very different from myself. I've also made some good friends with people that I probably wouldn't have otherwise.

In terms of making money, no, there has been little success. I got involved just as the stock market as a whole tanked. We've stayed afloat and are pretty much breaking even at this point, which by the way is much better than my individual portfolio. So, in relation to that, I suppose it has been successful.

Hope this helps,
zender >>

Thanks for the info. You are right in assuming that by success I meant more than just success of the investments themselves. You basically answered my question perfectly despite my vagueness in what I wanted to know. Meeting other people with similar interests to my own as well as learning and helping others learn are reasons I would be interested in such a club, on top of just investing money. As ntreu mentioned, I'm not sure where to start but will check out the site Zender recommended and try to find out if a club exists around here.

Thx again

Witold said:

<< I read somewhere that Investment clubs overall tend to underperform the market. >>

My understanding is that this was indeed true during the .com boom, but is no longer. By their very nature, investment clubs tend to be fairly conservative since they generally follow NAIC guidelines (a buy and hold approach only after fully researching and performing a valuation on the security and the company behind it) and they also require concensus prior to both buy and sell trading. Now that the market has gone bust, though, investment clubs overall have outperformed the average investor since their portfolios on the whole didn't take so much of a hit.

zender

liviathan said:

<< Anyone has any suggestions for a bank? or a bank/brokerage combo? >>

Our club pursued this last year. We had no luck finding an online bank who would open an reasonably priced (if not free) checking account for our Investment Club. We wound up staying with our Brick & Mortar local bank after they agreed to waive monthly fees. Since Buy and Hold does free ACH into the brokerage account this worked out pretty well for us.

zender

Has there ever been a study of investment clubs that measured their performance and compensated for survivalship bias, which I've heard is much stronger for clubs than for mutual funds?