Investment club tries for a comeback

Marketplace Staff Dec 25, 2009

Investment club tries for a comeback

Marketplace Staff Dec 25, 2009


Tess Vigeland: And finally, on this last Marketplace Money of 2009, we began the show with our experts in personal finance. So what better way to end than with some old friends who you might call a microcosm of this year’s stock market rollercoaster, they’re just regular old investors.

The ladies of Formerly Baroque, an investment club in northern Virginia. The club is one of three I profiled throughout 2007. By the end of that year, their investing decisions brought a 16 percent return worth more than $137,000. By the end of 2008, those numbers sounded like fiction. Their account held less than half that, and two members of the club dropped out. Seems it’s not nearly as much fun to lose money as it is to make it.

So we thought we’d check in and find out how 2009 panned out for them. And I’m joined by three club members. Dee Cardiff, hello.

Dee Cardiff: Hi Tess.

Vigeland: And June Chalou, hello.

June Chalou: Hello, Tess. How are you?

Vigeland: And Pat Meadows as well. Hi.

Pat Meadows: Hi Tess, nice to be back with you.

Vigeland: I’m so glad that you guys could come on and give us a bit of an update on how the club did this year. Pat, let me start with you. Was 2009 a little bit more kind to you than 2008 was?

Meadows: Yes, it was. Not a whole lot kind, like 2007 was, but we did much better this year than we did in ’08.

Vigeland: So where is the club’s total right now?

Meadows: The club’s total is about close to $54,000. And as we told you, at one point, we lost four members. So that added up to almost $27,000 that we had to pay out. We started the year at about $50,000, and as I think right now, we’re close to $54,000, but of the $27,000 we paid out, $10,000 of that was this year.

Vigeland: That was this year, OK. So you lost a couple of members again this year?

Meadows: Yes. We lost two last year, and we lost two this year.

Vigeland: What was the explanation for that, June? Was that cold feet on the part of a couple of the ladies? Were they just tired of losing money?

Chalou: Actually, there were different reasons why they left. One left, because she no longer found the club as much fun, and we were losing money and it was too stressful for her.

Vigeland: Well, Dee, let me ask you about that. I would imagine that that was probably a common feeling amongst club members, was it not?

Cardiff: Yes, it really was. We all were feeling kind of down about it, but now we’re left with a really strong core group of eight members, who are willing to make it work and make money.

Vigeland: OK, well let’s talk about how you did that this year. It sounds like you made $4,000 or $5,000 total. Now if you look at how the stock market did — of course, we hit bottom in March — but then there was a 50-60 percent run up after that. How and did you take any advantage of that, Pat?

Meadows: We changed some of the stocks that we had. One foreign stock, we stayed with, even though we had more than a 50 percent loss on that stock, we decided to hang on to it and see what happened. And it came back a whole lot quicker than anything else that we would’ve purchased at the time.

Vigeland: And what was that?

Meadows: HXM.

Vigeland: What do they sell?

Meadows: Home builder out of Brazil, I believe. And we went back to Apple.

Vigeland: Yeah, you’ve gone back and forth, sold and bought that several times, haven’t you?

Meadows: Right and did fairly well on that. And then picked… I think we have quite a diverse range now. We’re mostly in large caps, we focus on growth stocks over value stocks. We have about 52 percent in U.S. stocks and 37 percent in foreign stocks and then the rest is in cash. So we’re still smiling. We’re looking for a special stock, like Taser that will really take us up and over. But like Dee said, we have quite a core group now and all kind of thinking along the lines that we’re ready for it to pop.

Vigeland: June, as I mentioned, the Dow at least hit bottom in March. Can you describe for me what the club discussions were in the first couple of months of the year and the perhaps how that changed, if at all, over the course of the year?

Chalou: In March, we were so despondent and feeling that it wasn’t as much fun as it had been the year before. That’s when we began to enter into some of the old steady eddies, such as McDonald’s, JNJ. And said, OK, let’s get stocks that will maybe not go down. They might not make us a lot of money, but at least they are the steady ones. And JNJ, of course, gives a dividend, so we stayed with it. As we saw it go up, we felt confident, we sold our McDonald’s. And we have done a lot of studying and a lot of discussion, and we feel confident that we’re making good decisions

Vigeland: Dee, why did you sell McDonald’s?

Cardiff: We had made a profit first and then it started to go down. And we thought, “Hm, we learned this lesson before. Let’s sell before it really tanks on us.” We’re always kind of re-evaluating and trying to learn from past mistakes. And of course, there are new things out there, and it doesn’t always work.

Vigeland: Pat, I know a lot of people learned lessons last year in 2008, as they watched the market tank. What do you think the lessons are from this year, as there’s been such a bounce back in the last few months?

Meadows: Well, I think that we are not as trusting as we were. In ’08, when the people that were supposed to know what was going on kept saying, “OK, we hit bottom, it can’t get any worse,” and it did. And then a month later, “It can’t get any worse,” and it did. So we think trust our own research a little bit more than we used to and take more time to do the research, rather than trusting just what we’re hearing. I think that, like June said, we picked some of the old standards that were not in trouble, we didn’t have financial stocks and stayed with those. The bottom of our market was also in March, and we’ve come back over $10,000 since then. And I think, right now, we’re pretty proud of ourselves.

Vigeland: Well, let me ask each of you what your hopes are for the next year, as we head into 2010. Are you feeling confident about your investments or are you once burned, twice shy? Let me start with you, Pat.

Meadows: We are cautiously optimistic. I think that we’ve decided that we want to have more fun this year, we’re going to do some outside activities as a group also, so that we can have some fun. And then we started last year having a learning presentation at each one of our meetings. We’re always learning.

Vigeland: Dee, what about you? You were talking earlier about how it has been difficult, and it’s never fun to lose money. So how do you keep the interest as you go into 2010?

Cardiff: We noticed little signs that the economy is picking up; I noticed that in my small business. So I’m very confident that the market will go up, and we will watch for good stocks, but not expect to make those soaring profits like we did in the past.

Vigeland: And June, as you look back on 2007 and how exciting that was and the last two years not so exciting, I wonder, does that put your focus on more on the long term than it has been?

Chalou: It does put the focus on the long term and you’re right, 2008 wasn’t as much fun at first. But when you get down to eight members, you share so many fun activities that you’ve done and you do things more together and you do a lot of laughing. I feel such optimism. I think this 2010 will have a nice steady growth, I’m hoping.

Vigeland: Well, I love to hear that you’re all still laughing through the gains and the losses.

All three members: Right.

Vigeland: Well, great to talk to you all. And I hope to get out and visit you some time in 2010, but until then, happy holidays and a very happy new year.

Meadows: Thank you Tess, same to you.

Chalou: Happy New Year.

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