Investment Clubs: Club-hopping

Marketplace Staff Jan 12, 2007

KAI RYSSDAL: How many times have you said to yourself man I’ve just got to learn how to invest. Maybe you have picked up a couple of books and of course you’ve listened to this program. But like so many things sometimes the best way to learn is to just do it. So here is an idea. Join and investment club where you and your colleagues your friends or your family get together and talk stocks. Today we are going to introduce you to three investment clubs we’ll be falling regularly on the show. And here to tell us all about them is Marketplace’s Tess Vigeland. Hey, Tess.

TESS VIGELAND: Hey, Kai. Have you ever done anything like this joined some sort of investment club?

RYSSDAL: No. Un-unh. No way.

VIGELAND: I haven’t either but I have a friend who’s been in one for years back in Boston. And quite frankly she knew a whole lot more about this stuff a lot sooner than I did because of it. So let me introduce you to some of the folks that we’ll be talking to over the next year and maybe even beyond. Our first club is a group of women from Northern Virginia. They call themselves Formerly Baroque.

RYSSDAL: Okay. Yeah.

VIGELAND: Did you catch that not broke, baroque. And they have been getting together since 1994 among them a Librarian, a Preschool teacher, a woman who runs her own puppet business, a very diverse group to be sure. For several of them the club market their very first attempt at investing in individual stocks. And they meet every month on Saturday morning for breakfast 8:30. And on the menu recently should they sell or hold their Starbuck’s stock.

UNIDENTIFIED MEMBER, INVESTMENT CLUB: I don’t like the graph and the numbers but it’s in synch with the other stocks. Value line suggests it has high hopes. The breakfast market potential is out there and the debit card use is great. So the transaction time is down. So it’s a hold for me.

UNIDENTIFIED MEMBER, INVESTMENT CLUB: I finally went back into them, you know, after my cholesterol levels went so high I stopped going into Starbuck’s. So this week I finally went back in. I had to wait in line.

VIGELAND: Now Kai, doesn’t that seem like a pretty good reason to invest in some place.

RYSSDAL: Absolutely, as good a reason as any I suppose.

VIGELAND: Yeah, well that’s really part of the reason why we’re interested in following this club. They approach investing with real common sense, kind of what’s happening right in front of them and of course what’s happening on the ticker. They are also not afraid to ride bumps in the Stock Market. And they don’t mind asking for a little professional help.

UNIDENTIFIED MEMBER, INVESTMENT CLUB: My neighbor is an investment banker. I don’t know what company he works with but he was helping me with my electricity so I was asking him a lot of questions. And he said that he doesn’t worry if it goes down 20 percent after he buys. But as I was telling Morene, he also lives with his mom so I don’t know exactly–but I just thought that was interesting that it was almost expected sometimes for some stocks. I guess that you could hear about them people start buying them and then they’re dropping.

VIGELAND: So Kai, did you catch that very important investment advisor qualification.

RYSSDAL: Yeah, that’s — it’s not like she’s dating him. She just wants money advice from him.

VIGELAND: Yeah, but next time you are looking for an investment advisor, does not live with mother. So keep an eye out for that. Okay so we’ve had breakfast with Formerly Baroque in Virginia. Hope you are still hungry because next up we are having Lunch with a club in San Jose, CA nice round table at an Italian Eatery that way no one is sitting as the leader. There are six of them and they talk stock while stuffing their faces with salads and pasta.

WAITRESS: And so I have two rigatoni spinachi, a chef salad with no ham and dressing on the side, a chicken salad with no cheese, and a large lasagna, correct?

VIGELAND: All right. I’m hungry are you?

RYSSDAL: Yeah. I’m starving.

VIGELAND: Well, this group ranges in age from 30 to 70. You’ve got a couple engineers, a mom with two kids, a group elder, a real estate investor. And right now they collectively have about $24,000 in the market. And they’ve got a few thousand more to invest so to the business of the day what to buy? Well being here in California they’ve been following the state government’s lead by investing in some sources of alternative energy.

UNIDENTIFIED MEMBER, INVESTMENT CLUB: The things that are going to perhaps be expanding would be those which save energy, double glazing for example would be an obvious one, increased insulation for another, also maybe an alternate energy sources as well. I mean, even our governor here, good ol’ Arnie, is thinking upon spreading us — turning us into one big glass house eventually.

VIGELAND: And of course you know what they say about people in glass houses.

RYSSDAL: I do indeed.

VIGELAND: Well, no one should be throwing stones at this group. But like all or at least most investors they have made some mistakes over the years. Unlike our former first lady they didn’t do so well in the pork belly market, but we still like them ’cause they are willing to share their mistakes with all of us. And they even teach classes to other folks who are interested in starting investment clubs. And that is part of the reason we think they’ll be a great group to follow. Plus they’ve learned one very important truth.

UNIDENTIFIED MEMBER, INVESTMENT CLUB: There was some hypocriful saying, from one of the presidents either Truman or someone plus or minus a couple of presidents, where he kept saying he wanted to meet a one handed economist, ’cause he was so tired of hearing them say “Well on the one hand and on the other hand” and waffling that phrase has just always stuck with me because it’s more art than science in a lot of ways.

RYSSDAL: Yeah, and it is though Tess, sort of a dismal science sometimes it’s not all fun and games.

VIGELAND: Right and perhaps even a dismal art. But these clubs defiantly know how to mix work with pleasure. We’ve had breakfast in Virginia, Lunch in San Jose, and now we go to. . .

RYSSDAL: Yeah. Dinner.

VIGELAND: Dinner and drinks.

RYSSDAL: Where we going?

VIGELAND: In Seattle.

RYSSDAL: All right.

VIGELAND: It’s the perfect intersection of market talk and micro brews. And in fact they named their group after the first bar that they met at, which was called Meridian Pacific. This is a pretty young crew, six of them age 25 to 30. That’s a nice long investing horizon as we always advise people to do and they have actually beaten the S&P 500 for the last three years. Lately like a lot of investors they’ve been looking over seas.

UNIDENTIFIED MEMBER, INVESTMENT CLUB: It makes for a very interesting play, especially in both India and China. One of the reasons why banks are so interesting is because there is an emerging middle class. There are a lot of people in India now who are making a really good living as a result of being software developers, outsource, etcetera. And it’s really the first time that they are — all their additional income and disposable income is available for banking needs. So we think that’s a fantastic opportunity, they are sort of, if you will, selling bullets to the war. So we really like banks specifically because of the way they fulfill the needs of the newly emerging middle class.

VIGELAND: Now Kai, these guys sound really smart about this stuff, don’t they?

RYSSDAL: Um-hum, you bet. I mean, they really do. They are all talking the talk all three groups.

VIGELAND: Yep. But none of them came from a money background. And in this group they never really knew how to invest so they got together learned as a group. And that means a whole lot of spread sheets at their meetings and something that they call the market watch board. It’s a list of stocks and sectors that they’ve been tracking over the last week or month. And when we checked in with them they were checking out the auto industry.

UNIDENTIFIED MEMBER, INVESTMENT CLUB: GM is essentially unchanged down 3.3 percent in the last three months. We’ve all written off GM as an investment opportunity right now. Ford is down 4percent and down 14 percent for the last three months.

VIGELAND: And no doubt they will be following Detroit’s continued woes or maybe even progress throughout this year. Just as we will be following the progress of all the investment clubs.

RYSSDAL: And I’ll tell you it sounds great. I really look forward to hearing about the rest of them. Tess, thank you so much.

VIGELAND: Thank you, Kai.

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