Investment Clubs: Return to Seattle

Marketplace Staff May 11, 2007

Investment Clubs: Return to Seattle

Marketplace Staff May 11, 2007

TESS VIGELAND: This is Marketplace Money from American Public Media. I’m Tess Vigeland.

Back now to our Investment Club series. We’re following three clubs, one in Seattle, another in San Jose, and a third in Fairfax, Virginia, as they figure out what stocks to buy, sell and hold throughout the year.

It’s been a little more than three months since our last trip to Seattle. The Meridian Pacific club has six members who meet once a week. This time not for coffee, but for beers at a German pub called Feierabend. Three of them showed up tonight, Nathan Buggia, who was here for our last visit, plus Mohit Srivastava and a thirsty Sumit Lohia.

MOHIT SRIVASTAVA: Please order Francis Conner. Thanks. When I was in Germany I really enjoyed the beer. It just kind of, it just brings back old memories.

VIGELAND: To refresh our memories, this club is a little different from the ones in San Jose and Virginia. They don’t invest as a group. So I asked how their individual stock picks are doing.

NATHAN BUGGIA: This is Nathan. To be honest, I am up 3.5 percent for the year, not a whole lot. I took 40 percent and invested it in a broad S&P index fund, 20 percent in an overseas investment. This year, I’m a little bit heavier in CDs and mutual funds because I want to be a little bit more conservative.

How about you?

MOHIT SRIVASTAVA: Oh, this is Mohit. I invest, for the most part, long-term. I used to have some play money I put in individual stocks, the third in international. I have about 25 percent still in Microsoft, which I wouldn’t necessarily recommend. But that’s just because I used to work there and I’ve held on to that. And it’s also Defense & Aerospace.

So how’s your return for the year so far?

SRIVASTAVA: It looks like it’s in the 5, 6 percent ranch since January 1.

VIGELAND: All right. Sumit?

SUMIT LOHIA: This is Sumit. I think my return is closer to about, as Mohit said, about closer to six percent or so. Overall, I think I’m want to play a longer term into the market as opposed to this, you know, a one-month or six-month window. I basically feel that the real estate market in Seattle is probably has the best return, longer term. So most of our money is actually in certificate or deposits, because I’m willing to put down a down payment for a house instead. For the remaining investments, I do have some stock in Amazon, because of having worked there.

VIGELAND: It’s been a busy time in the stock market since we last met with the Seattle Club. Sumit still has confidence in housing in spite of the sub-prime crisis. And none of them really flipped out over the big market dip in February, the one that started with a 9 percent drop on the exchange in Shanghai.

This is Nathan. Because I was so diversified, it didn’t really impact me that much.

And you didn’t actively move out of any stocks because of what happened?

BUGGIA: I thought about it. I thought about it quite a lot, and I still think about it. But I force myself to not do anything, because I wanted to invest based on numbers, not based on emotion. It was not easy.

SRIVASTAVA: Honestly, I was a little bit out of — was not fully paying attention to the market at the time. But I did catch some news reports and the amount that the Shanghai market dropped that day, compared to the gains in the last year, you know, it was not that significant. So I didn’t take my money out of the market. I just held on.

VIGELAND: And how about you Sumit?

SUMIT LOHIA: Well, with Shanghai, as kind of Nathan and Mohit mentioned, I was little concerned, obviously the day off and then the day after as to what would happen to the market over here. But mostly, I just stayed put.

VIGELAND: Turns out that was exactly the right thing to do. Both the Dow and the Shanghai Index hit new records since then. And this club is exploring the possibility of even greater investments in overseas markets with the new tool coming out soon from an online trading company.

BUGGIA: So just to set to some context, we’ve been looking at investing in foreign companies for quite a while, actually a couple of years. And only Sandy has been really able to do that, being a Indian resident.

SRIVASTAVA: This is Mohit. If you are a U.S. citizen, there are two ways to invest internationally. The first way is through something called ADRs. Most of us have done that. So that’s essentially a listing on the US stock market for a foreign company. And the other way you can get into a foreign market is buying a mutual fund.

BUGGIA: It was great news when eTrading announced that they were going to release a global trading platform, which will allow Americans to buy common stock in Canada, France, Germany, Hong Kong, Japan, and the United Kingdom.

LOHIA: So the cost of setting up an account — they’ll have a new type of brokerage account for global trading. I read a couple of articles and they did highlight a few issues. When you’re trading foreign companies, there’s additional tax liabilities, there’s also data quality issues. It’s much, much harder to find data on foreign companies as we experience with both Nintendo and Hyundai. I mean in the accounting practices are not the same as they are in the U.S. So there’s no Sarbanes-Oxley or SCC guidelines.

VIGELAND: And this is something that’s attractive to you because?

SRIVASTAVA: Well, I’m not necessarily ready to purchase foreign companies or stocks yet, but the fact that we have the opportunity to now allow us to explore more options.

LOHIA: Lots of the developing markets are growing really fast, but also I don’t have a lot of the practices in place that we have in the U.S. I think it’s — this is Sumit — as Mohit mentioned, you know, I think it’s — there are ways that you can actually come out much better by investing in some of these markets. I wouldn’t say put all your money, obviously, in one basket, but, you know, having a certain diversified portfolio definitely helps a lot.

Sound advice. We’ll check in later in the year to find out if any of them decided to go for it on foreign exchanges. Next week, the women of our Virginia Club get ready to pour the bubbly as their investments cross the $100,000 mark. You’ll find photos and links to all of our Investment Club segments at

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