Now, you can learn about investing in countless books, magazines and Web sites, but you may enjoy the learning process more by joining an investment club. After all, most of us are social creatures by nature, so we like being with other people.
A blogger that I follow “Bear With The Bull” belongs to a club that just shares investment ideas. He was kind enough to answer a few of my questions about his club.
How many members are in your club?
“We currently have 36 members on Meetup, not all are active. We use Meetup.com as our internet platform and we have a Facebook group page as well. We have a 6 month activity clause. Basically we remove anybody who is inactive for 6 months.”
How often to you meet?
“We meet once a month at a local Denny’s. We try to keep the meeting short less than 2 hours. We usually have anywhere from 3 or 4 to a dozen or more show up for the monthly meetings.”
What are the experience levels of the membership, any newbies to investing?
“We have all different experience levels and investment styles. It was surprising to find out that we have pure Chartists, option traders (mostly selling), IBD folks, and people who followed other systems and sites. This past meetup we had 4 new members. 1 newbie, 2 experienced traders but new to IBD (Investor’s Business Daily), and a retired couple who had just consolidated their retirement portfolios into one.”
Is every member required to bring a stock pick or ETF to the meeting or do you take turns?
“A week before each meeting we send out an email asking for stocks and investment topics of interest. Basically this is a solicitation for topics and stocks to discuss and forms the basics of our agenda. We generally give each person the opportunity to talk about their suggestions during the meeting.”
Do you find the information useful and have you invested in any ideas that were presented?
“Generally I and others in the group find the information interesting and informative. Sometime members invest in others watch lists but for the most part I think people use it as a learning experience.”
Are recommendations review at the next meeting?
“We keep a list of all stock suggestions and track their performance. We do keep an informal tally of whose stocks are best or not.”
Thank you “Bear With The Bull” for sharing information about your investment club!
Now, do you lack the confidence or discipline to invest on your own? There are also investment clubs that you can join where members’ pool their money, study different investments and the group decides to buy or sell based on a majority vote. Most of these clubs require a small monthly investment anywhere from $50 to $100 a month.
- Investment clubs can be fun.
- It is a good way to get your feet wet.
- Clubs provide an affordable way to invest. (Sharing the costs)
- Investment clubs, by their very nature, tend to have a long-term focus. Members are interested in following investments over time, not buying and selling at a frantic pace.
- You can find wisdom in a group
- Unregulated – You have to have a high degree of trust. (Income & tax liability is calculated correctly)
- Disagreements – Democracy is great but you could disagree with the direction of the club or with some of the investments choices.
- Risk tolerance – Make sure that you’re comfortable with a club’s investment philosophy and the amount of investment risk.
- Difficulty leaving – Make sure that the club has a reasonable exit time for members who want to leave.
Did you know that Warren Buffett’s wealth to acquire Berkshire Hathaway in 1965 was created primarily from his investment partnerships? The first of which was Buffett Associates, established out of his bedroom in May 1, 1956, at the age of 25. It started with $105,000 from seven partners, all of whom were close family and friends.
He was solely responsible for managing a significant amount of other people’s money with investors agreeing to pay a fee for strong investment performance. These investment partnerships eventually fell under the umbrella of Buffett Partnership, Ltd., which was the entity that bought a controlling stake in Berkshire Hathaway.
I would classify “Buffett Associates” as a legalized type of investment club.
On a personal note: My investment club just celebrated it’s 15 year anniversary.