In 1983, a stock broker who didn’t want to be bothered by old women seeking to invest turned away 15 of them ranging in age from 52 to 90. Gentlemen, hold on to your three-piece suits.
In 1994, these very same undaunted ladies–average age 68–from a squeaky little rural Illinois town, displayed savvy investing skills as they earned an average 23.4 percent return on their stock portfolio. In 1991, their return on investment was a whopping 48 percent.
After consistently outperforming professional money managers by distinguished margins, they published a book of their simple stock tips, “Beardstown Ladies’ Common-Sense Investment Guide.” It spent nearly three months on the New York Times bestseller list in hardcover.
Amid the firestorm of activity sparked by these rural investment wizards, local groups within the Fox Valley and surrounding counties have set out to achieve the same success. Karin Malesh of St. Charles, co-founder of the Fox Investment Group, had been taking a stock investment class with friend Phyllis Short of St. Charles. After reading “Beardstown Ladies,” she mused, “We can do this.” Now, a year later, the 22-member group is assessing its $24,000 portfolio monthly and showing a profit.
Investment clubs may sound flashy, but upstarts must toil through an avalanche of details prior to nosing through the NASDAQ. St. Charles resident Mary Ann Bakken of Stocks Sixth Avenue, another Beardstown-generated group composed of St. Charles Public Library employees said, “Getting started is a time-consuming process. We formed various committees to do a lot of the work. We had to draw up bylaws, establish banking accounts, register with the IRS and select a broker. We became a limited partnership following the suggestions of the Beardstown ladies and (from) reading the NAIC (National Association of Investors Corp.) guidelines for starting up the investment clubs.” This process took them more than three months.
Ask any market mogul. It takes dedication, money and lots of time to learn the ins and outs of the stock market, yet these new investors are highly motivated. “I want to take charge of my financial matters,” declared Bakken. “Many women will end up being widowed or divorced. It’s a matter of self-education.”
Investment groups can provide women with the financial direction they are looking for. Donna Andrini of St. Charles and a member of the Fox Valley Christian Women’s Investment Group, said, “When you consider most will retire by age 65, for many women that means 20 or 25 years without significant income. Younger members are considering the high costs of college for their children.” The group is enjoying a healthy 19.5 percent return on their investments this year.
Malesh of the Fox Investment Group said, “I wanted to have control over my investing. Everyone in the club echoed similar feelings. We pay out large sums of money for financial security and don’t know where it’s all going. Instead of dumping our money into mutual funds or other investments, we wanted to pick our own stocks and create a mutual fund through our club.”
Joan Parr of St. Charles, Fox Investment Group partner, reflected on a problem that many face today in the confusing financial world: “I made some very bad errors. Not only me but my stock brokers. I think I can do better now. Just recently I spent $150 on broker fees I could have saved. Once I learned about companies with a DRP (Direct Re-investment Plan), I often don’t have to pay broker fees.”
Although increased financial security served as a major motivator, a common ambition for joining investment clubs seems to be education. “I want to be able to manage my own money, but I want to learn,” said Fox Investment Group member Gretchen Frantz of Geneva.
Most investment clubs like these in the Fox Valley require an initial cash output followed by smaller monthly installments. Members then take turns on the stock selection committee. This is the source of most of the sweat. The committee carefully researches potential stock investment depending heavily on Value Line, a stock investment guide.
They compare companies in similar fields and plug the data into a list of 10 characteristics of a good stock as prescribed by their Beardstown gurus. Then the stock selection committee, usually two to four members, presents the findings at the group’s monthly meetings. Members analyze the presentation, then vote whether to purchase stocks; club members share in the profits, or losses. Members also use the research to make their personal investments.
“The most valuable learning comes when a member is part of the stock selection committee for the month,” said Sue Watkins of St. Charles, Fox Investment Group co-founder/junior partner. “They are the ones who go to the library and do the research,”
Marge Clark of Geneva was a member of the Fox Investment Group’s first stock selection committee. As a librarian at the Geneva Public Library, she was used to helping others find financial information. “It was fantastic,” she said. “I was always on the outside looking in. Now it’s like a whole new world. I didn’t know where to go to begin, but what used to be interesting has become my passion.”
Clark and Malesh spent weeks studying Value Line and making the same kinds of comparisons the Beardstown ladies advised. She recommended purchase of Clayton Homes and Oracle, a software stock. “After we made our presentation and cautiously debated the proposal,” she said, “I heard someone whisper quietly in the background, `Let’s do it.’ I felt then that all of the work of the first four or five months had paid off. From that point on I felt like we were a unit.”
“We stay very close to the suggestions prescribed by the Beardstown ladies,” Watkins said. “We look almost exclusively at the list of 10 indicators that have contributed to their success and reliability. We use the Internet to find company highlights.”
The Beardstown group not only specified exact investment guidelines, they also were clear in setting the mood as well. They prescribed education, profit and, most of all, fun as the conducive environment for success. The road to bulging investment portfolios oozing profits (or losing money) is lined with surprises but assuredly teeming with experience.
“We are making new friends while we learn to work together and looking forward to more social events. It’s a fulfilling experience,” Watkins said.
Donna Andrini added, “We look forward to working and getting old together. The Monday morning stock quarterbacking is wonderful and fun to see. Ten years from now it will be even better.”
“It makes me kind of chuckle to look at the financial pages every morning,” said Robin Albright of Geneva, a member of Fox Valley Christian Women’s Investment Group. “That was the last thing I would have ever done in the past.”
“No more Ladies Home Journal for me,” said Fox Investment Group’s Judy Buttell of St. Charles. “I take Better Investment Magazine to bed with me and wake up to the business section of the Chicago Tribune. My husband wants me start doing all our investing, but I’m not ready for that just yet.”
Albright, who has nine children, said, “This is something I do for me. It’s also a family thing. The NAIC has a program whereby I can purchase a single share of stock. I can buy a share for the kids and then they can watch it grow. They learn and the family shares in the experience.”
Fox Investment Group’s Sharon Smith of St. Charles concurs. “The best thing in the world is for me to learn and grow,” she said, “but it’s even better for my kids to see me learn. What a wonderful thing to have my 6th grader help me with the computer. We’re all learning together.”
Previously uninitiated devotees have since learned computer skills, pumped up softened mathematics muscles and, as Joan Parr did, even built her own desk for the computer.
Stocks Sixth Avenue investor Laura Haule of Geneva said, “We (librarians) have seen a huge increase in the use of investment material by women, and most of it seems related to the Beardstown ladies. Women’s investment groups have been around for years, but I can see this book has drastically influenced women.”
NAIC representative Barry Murphy said, “Our association has gone from 7,000 clubs in 1992 to 24,000 in ’96. We’ve had a 35 percent increase in the last six months. Certainly the Beardstown ladies have made a huge impact.”
What’s next? The Fox Valley Christian Women’s Investment Group is planning a field trip to the Chicago Stock Exchange with their broker, Shellie Reed of L.P.L. Financial Services of St. Charles and broker to five Fox Valley female investment clubs.
“These women are very, very serious,” Reed said. “It amazes me at the detail of their research. They want to know the whys of investment, and they’re learning to answer their own questions. They’re turning out to be 20 or so individuals who have all the tools to make decisions as good as the very best investors.”
Now if we could only get them to give us a few tips.
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Interested in joining or starting an investment club? Log on to the NAIC: http://www.better-investing.org, or call 810-583-6242.
