Small Investors Eagerly Wield Their Own Clubs

The planets aligned, Alan Greenspan kept quiet, stock indexes soared, and Doris Lance beamed.

“Did you see what the Dow closed at?” she asked, elated, after the New York Stock Exchange closed at a record 9,736.08 on Friday. “Wooo-weeee! . . . It is up. It is way up.”

With the release of a favorable February jobs report and the threat of rising interest rates at bay for the time being, the market stood poised to shatter the 10,000 mark after rocketing 268.68 points Friday.

Not long ago, those numbers would have meant little to Lance or any of the other 14 members of her investment club.

But now, armed with the knowledge of what to look for in an investment and a bubbling enthusiasm for playing the market game, they’re cleaning up.

“Two and a half years ago, I couldn’t even read a ticker tape,” said Lance, president of Common Cents Investors of Ventura County. “I didn’t even know what it meant, but now you can’t drag me away from it. . . . I just have to know what’s happening with the market.”

Since forming the club almost three years ago, Common Cents has invested a little more than $10,000 in industries ranging from high technology to medical supplies. As of Friday, their portfolio value had increased to about $18,200.

There are now 171 investment clubs in the county registered with the National Assn. of Investors Corp., with about as diverse a membership as there are stocks.

Teens, couples, an alliance of investment-savvy nurses and a group of female mechanics all have clubs.

Most often they christen their clubs with flashy names like Fortune Seekers or the Pacific Mermaids Syndicate and stay rather small, most having 10 to 20 members.

As a rule, the clubs invest conservatively, keeping an eye on the long-term rather than the quick turnaround, with members using them primarily to learn about investing so they can keep their individual portfolios growing.

And, as most investment club members say, it’s fun.

“It’s not easy doing this,” said Fortune Seekers president Thelma Lyden of Camarillo. “It takes a lot of work and it’s a huge challenge, but let me tell you, it’s a heck of a blast.”

The 13-member Fortune Seekers group got its start more than a year ago.

“None of us had really ever done anything in the stock market,” said Lyden, who now tosses about terms like “equity investment” and “SSG.” “It was so unknown, and we didn’t have any idea of what we were really getting ourselves into.”

But with the help of the NAIC and its group of local experts, the club learned about the market and the kind of mettle it takes to be a player.

Since its initial investment, Fortune Seekers’ portfolio value has increased more than 21%, well over the benchmark, to $10,246.67 as of Friday.

Most clubs follow investment guidelines set by the NAIC, which has also helped a number of local organizations get started.

Members generally pay the investment club a one-time enrollment fee of about $100 and makes a monthly investment of $25 to $50. That money is then invested in companies the club decides on as a whole.

The decision can often be a long and heated process.

“Sometimes it can be pretty hard, but when you get 14 women agreeing on one company, you know you’ve done a lot and you’ve got something pretty good,” Lance said.

According to the NAIC, 54% of clubs in the area are women-only. Of the rest, 33% are mixed, and only 8% are men-only.

Many of the women got involved in the stock market after reading the famed, though flawed, “Beardstown Ladies’ Common-Sense Investment Guide.”

“I saw them on PBS and I just went crazy,” Lance said. “I bought the book, devoured it in two days, and on the third called them because I wanted to start my own [club].”

As one of the oldest Ventura County investors clubs, the 5-year-old Pacific Mermaids Syndicate has traditionally been one of the market’s biggest winners.

They adopted their moniker--whose initials, they like to point out, refer to something particularly female--to make it clear that they were all about investing and that they were “ladies,” as club president Dawn McMillan refers to her members.

The club has watched its portfolio of 15 stocks grow by more than 36% since 1996.

Not bad for a group that jumped into the fray rather late.

“We’re pretty proud of our portfolio,” said McMillan, who’s bullish on mutual funds at the moment. “For a bunch of ladies, that isn’t too bad.”

With monthly meetings held at the posh Pacific Corinthian Yacht Club in Oxnard, the Mermaids talk business: which company seems on the up and up, what market trends are developing, and whether or not a change in a company’s management jibes with their investment ethos.

From a financial perspective, investment experts agree that clubs like Common Cents and Fortune Seekers are useful for people just jumping into the market, but caution about banking one’s financial future on them.

“In a broader sense, people are starting to realize that they need to be more responsible about their financial future and that goes hand in hand with having an investment portfolio,” said Mark Loftus, a certified financial planner and senior vice president of investment for the Chicago-based Everen Securities Corp. “But clubs aren’t the places where people should be investing their real money.”

Most don’t--they tend to use the clubs as a way to stay abreast of market trends as they cultivate their personal portfolios.

As for the future, investment club members have varying ideas, but believe the economy and stock market, which dropped eight points Monday to close at 9,727.61, will remain strong and investing will continue to be exhilarating.

“I can’t see it changing all that much,” McMillan said. “In the five years since we started the club, we’ve had an absolute ball with it.”

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