Striking Gold In Investing Groups
Before the Desert Gold Diggers start digging into annual reports, they nibble on snacks and engage in small talk.
Several members of the Valley investment club used to work at America West Airlines' Tempe headquarters, and they use their monthly meetings to catch up with one another.
"I'd like to have my money grow and learn more about stocks and investing," said Monica Smith, who hosted a club get-together earlier this month at her Scottsdale home. "But it's also a way for us to stay in contact."
The investment-club format has thrived for more than half of a century as a way to make the stock market educational, lucrative and fun. More than 3,300 Arizonans belong to 412 clubs affiliated with BetterInvesting, an umbrella group formerly known as the National Association of Investors Corp.
The mood at club meetings tends to be on the light side, perhaps because members typically don't have big money invested in club portfolios, at least initially. The average member's stake in clubs nationally is only about $8,000, with most people viewing these holdings as a supplement to their 401(k) accounts, IRAs and other serious money.
Club members make group purchase and sell decisions and share the homework when it comes to researching and monitoring stocks.
"The most exciting thing for me is seeing members step up," said Nancy Grace, a former Wall Street analyst and onetime investor-relations specialist at America West who serves as president of the Desert Gold Diggers. "It's really about making investing and financial decisions enjoyable."
Notably, about two-thirds of BetterInvesting members are women, which reflects a focus on both education and sharing.
"My investment experience has been minimal to none," said Smith, a solutions consultant for the travel/transportation industry. "This is a learning group and a social group."
Membership appeals to many women who want to become more independent, said Wayne Stutzer, a financial consultant at RBC Dain Rauscher in Scottsdale who has worked with scores of Valley clubs. "They want to learn and don't want to have to depend on their spouses," he said.
Even a modest number of youths belong to investment clubs -- more than 900 nationally, BetterInvesting reports. Many youngsters belong to clubs built around family ties.
Investment clubs don't always flourish. Members bicker, move to other states, get bored or seek greener pastures in areas like real estate.
With the stock market still struggling to get back to its former heights, membership in Arizona investment clubs is down. Five years ago, Arizona counted about 800 clubs, nearly double the current tally.
"If a club is still together after the bear market, they're dedicated, and attendance has been steady," said Stutzer, who hosts a Sunday morning money talk show on KTAR.
Surviving club members are more willing to do their homework now than in prior years, he observes, and they have fewer emotional ties to individual companies, with a greater willingness to sell.
Most clubs don't demand much in either time or money from members. Grace, who now serves as development director at the Phoenix Zoo, estimates she and her club colleagues commit about two hours a month.
The Desert Gold Diggers decided to invest $1,000 each when they started the club earlier this year and plan to make annual contributions after that. Yet many groups choose much smaller initial and more frequent monthly contributions of $25 to $100 or so.
Club portfolios tend to be concentrated in a dozen or so stocks, with some groups adding mutual funds for extra diversification.
BetterInvesting preaches four key tenets -- regular contributions, reinvestment of dividends, diversification and focus on quality growth stocks -- companies that have tended to post higher profit numbers over the years.
Individual club holdings tend to be eclectic. The Desert Gold Diggers, for example, have taken stakes in homebuilder Toll Brothers, Internet powerhouse Google, clothing retailer Urban Outfitters, medical-equipment maker Fisher Scientific International, toiletries seller Avon Products and Phoenix copper giant Phelps Dodge.
"Since most of our members are novices, one thing I preach is patience," said Grace. "You can't expect stocks to go north right away."
The most successful clubs are those whose members take that advice to heart.
Where to Join
Here are some investment clubs operating in the Valley:
BetterInvesting (www.betterinvesting.org, 1-877-275-6242): Oversees a network of more than 400 Arizona investment clubs. People can join existing clubs, form their own clubs or join BetterInvesting as individual members. Club dues are $40, plus $25 per person yearly. Individual memberships run $50. Members receive BetterInvesting magazine, stock or mutual fund handbooks and more.
American Association of Individual Investors (www.aaii.com, 1-800-428-2244): A national investor-education group with a Valley chapter that meets monthly on Saturdays in Scottsdale, typically in fall, winter and spring. Basic membership costs $29 yearly and includes the AAII Journal, a mutual fund guide, a tax-planning guide and more.
Arizona Options Group: Valley educational club geared to learning about technical analysis and computer analysis of stocks, options and more. The group meets once a month in Scottsdale, usually on Saturday mornings, except in July and August. Membership costs $24. For information, contact Clare Kile, group president, at cdkile@cox.net.
All About Clubs
These statistics apply to clubs operating under the direction of BetterInvesting, a non-profit group formerly known as the National Association of Investors Corp.
Members: 220,000.
Clubs: 19,646.
Men: 34 percent.
Women: 66 percent.
Median age: 55.8.
Average household income: $114,100.
Members with college degrees: 72 percent.
Average members per club: 11.
Average member's monthly investment: $84.
Average club's portfolio value: $86,700.
Top stocks held by clubs: Fiserv Inc., Level 3 Communications Inc., Qualcomm Inc., Best Buy Co., Stryker Corp., Williams-Sonoma Inc., Procter & Gamble Co., Sysco Corp., Chico's FAS Inc., Lucent Technologies Inc.
Reach the reporter at russ.wiles@arizonarepublic.com.
Copyright © 2005 The Arizona Republic
08/01/2005 10:26:23 AM [The Arizona Republic]
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