Photograph by Robert Scheer
Partnership 2000 meets once a month to buy and sell stock. On the couch are Saratogans Marcia Hall (left), Joanne Peterson and Bonnie Fox.
By Michelle Gabriel
It's Monday afternoon, and 20 local women are settling themselves into chairs in Bonnie Fox's Saratoga home. They've chatted a bit, filled their glasses with ice water, cold juice or diet soda, and now, papers in hand, they are ready to get down to the real reason they have assembled.
"Did the acquisition go through?" "What's the latest report from Standard & Poor's?" "What are the recommendations based on the analysis of the stock?" "What about the annual report?"
"The company's earnings are up for the quarter." "What's the recommendation--should we sell or watch for a while?" the women ask.
These are the women of Partnership 2000, an investment club whose members meet monthly to discuss the merits of buying, selling or closely monitoring the various securities they mutually own as an investment group.
Partnership 2000 follows the guidelines set forth by the National Association of Investment Clubs (NAIC) and as such is educationally focused. The group's purpose, according to the NAIC, is to have a group of individuals join together to learn investment principles and to exchange information--simply put, to learn and earn.
Like most investment clubs, Partnership 2000 meets once a month, collects the monthly investment per member, reviews stock-study reports, introduces an educational topic and selects stocks in which to invest.
Now 312 years old, Partnership 2000 initially started with a monthly investment of $25 per member. The group recently voted to increase that amount to $40. Today its collective portfolio is worth more than $39,000 and the group is still going strong.
"We're a diversified group," says club president Carol Hutchinson of Saratoga. "One of our members is an artist, another is a nurse, and several members are in the business sector. As a group we are able to offer different insights and approaches to the stocks we follow.
"The NAIC also offers workshops which many of our members attend, at their own expense, reporting back to the group what they learned."
Hutchinson says the members often meet with executives of companies whose stock the group might be considering for purchase. "We take tours, ask questions, and generally try to receive firsthand knowledge of the company."
While investment clubs can select any companies they want, often clubs choose those that are either closer to home or have a direct impact on their lives.
Gay Crawford, another Saratogan and one of the founders of Partnership 2000, says that because members live in Silicon Valley, their focus is in the high-tech industry, although they do not limit themselves to high-tech stocks. "We like to buy stock in companies we can understand, ones we can see for ourselves," Crawford says.
Following NAIC guidelines, which recommend selecting three different companies within a specific industry to research, Crawford recalls the group's early interest in the food industry.
"We researched Wrigley, Hershey and Sara Lee. We had the opportunity to sample quite a lot of food before eventually deciding on Wrigley."
Getting the club off and running in the beginning was exciting, says Crawford. Establishing the size and meeting time was the first order of business for the fledging club, followed by the decision of how much to invest on a monthly basis. Members were also invited to interview several brokers before deciding on one as their broker of record.
That, says Crawford, turned out to be Laurie Besteman from Prudential Securities in San Jose. She was selected because of her experience working with investment clubs as well as her commitment to supporting their investment goals. A broker for 16 years, Besteman says she is "dedicated to the idea that people need to understand investing." This, she says, is especially critical for many women who are not necessarily part of the investment process in their family.
"Statistically, women end up alone. We need to not learn how to manage money at a time of great trauma or grief. It is important for women to develop a comfort level with managing money."
Besteman helped the group get set up, then stepped back to allow the members to become independent and self-sustaining.
"I don't go to all the meetings. I believe it's important for the group to develop self-confidence in their ability to make investment decisions. Good decisions or bad decisions, they are both part of the learning process."
The group now functions pretty much on its own, says Hutchinson, although Besteman is there if needed.
"Partnership 2000 is an enthusiastic group and highly motivated," says Besteman. "It is a pleasure to see how strong and committed a group they've become."
While decisions to buy or sell may or may not always be made at a meeting, the investment-club bylaws assign members as designated stock watchers. These individuals are responsible for instigating the sale of a stock if it becomes necessary to do so between meetings. According to the bylaws, a unanimous vote of the stock-watchers and the executive committee is needed to sell at that point.
To keep everyone informed, Hutchinson says the club has a telephone tree set up to alert members of any action being taken regarding stock transactions between meetings.
"Helping members develop a sense of what criteria to use in choosing stock to buy or subsequently to sell is an important element in the educational focus of any investment club," says Besteman, who has noticed an increased interest in investment clubs over the past several months, "certainly more interest than I've seen in a long time."
That's not surprising. According to the NAIC, the number of investment clubs affiliated with the association rose from 7,200 in 1991 to more than 21,000 as of April of this year. Over 20 years, the average club affiliated with the national organization has achieved an annual return of 12.5 percent.
Historically, investment clubs are not new. They've been around in one form or another since the turn of the century. Often more social than financial, it wasn't until the 1940s that the modern-day version of investment clubs began in earnest. Although many eventually disband due to loss of interest and members retiring or relocating, NAIC records show one Boston club that has operated for more than 30 years and many clubs still going strong after 10, 15 and 25 years.
The key to a successful investment club, say both members and brokers, is to establish a unity of focus and compatibility.
"The chemistry has to be right," says Besteman.
And so does the investment philosophy, says NAIC's chairman Thomas E. O'Hara. "Members need to understand that although an investment club may have a social ambiance, it is a serious commitment to long-term investing and financial study."
While it is strictly voluntary, affiliation with the NAIC does provide additional benefits, including a monthly magazine, Better Investing, an investors' manual containing a learn-by-doing stock study program, free monthly Standard & Poor's and Fidelity bond reports, as well as member discounts for various services and materials such as software programs and investment videos.
To form an investment club, contact the NAIC in Royal Oaks, Mich., at (810) 583-6242, or Partnership 2000 at 867-1543.
This article appeared in the Saratoga News, July 10, 1996.
©1996 Metro Publishing, Inc. All rights reserved