On-Line Investor Clubs Provide Novel Way to Increase Net Gains
May 20, 2011
Investor clubs have long been a staple of the personal investment scene -- a small group of individuals who get together on a regular basis to track investments while discussing topics ranging from fertilizer to Lemay. Although the ``club'' aspect tends to conjure up images of a den full of gurus eager to outperform one another as well as the market, the reality may be quite different. Members are expected to attend meetings, do homework on a particular topic and share their results with the group. While the ``paper and pencil'' approach may have worked in the past, laptops and modems are clearly the new weapons of choice. In keeping with the goal to stay on top of the market, clubs and their members are increasingly looking to the Net to share knowledge and increase returns. On CompuServe the National Association of Investors Corp. sponsors the Serious Stock Group, an on-line club with no money, but lots of ego at stake -- members are expected to lead an intense study of a particular stock or sector each month. The SSG limits membership to 10 people, but any CompuServe subscriber with an eye for investments can stop by to watch the experts at work. Given the demonstrated potential of cyberspace to bring investors together, are on-line investment clubs the wave of the future? For some, the future is now. The NAIC-sponsored Pioneer Club operating through CompuServe claims to be the oldest on-line club, having set up shop in 1991. Comprised of 14 individuals whose terminals span from Japan to Nebraska to New York, the Pioneers pay monthly dues of $20 and sport a portfolio worth more than $30,000. According to Doyle Geisler, club member and founder of Invest-o-rama, an on-line guide to the on-line investment scene, Pioneers take their mission seriously: ``To join, you must come on-line so that other members get to know you. New members must send out an on-line biography and everyone is expected to hold up his or her end of a stock study.'' In short, the Pioneer Club demands the same level of commitment as its well-grounded counterparts with one notable exception: Due to individual schedules and time zones, they have never conducted a group meeting. They communicate solely by e-mail messages that stay on-line for up to two weeks. Although the Pioneers may be first, they are not alone. Other on-line investment groups include the High Seas Traders, a club composed of commissioned officers of the sea services of the U.S. Armed Forces and the In The Black Investment Club, which fosters African-American participation. Some clubs attract first-time investors who are eager to learn how to manage their money and take control of their financial destiny. Others are made up of longtime savvy investors who just enjoy participating in the club. Whether the investment club is on-line or if club members are seeking to use the Net as a resource, there are a number of existing resources available to ease the launch into cyberspace. Organizations such as the NAIC have services available to investor clubs and individuals that want to further their investment education without making the time (not to mention social) commitment associated with club membership. The Michigan-based NAIC provides a variety of resources for those interested in forming and maintaining a viable club: an official start-up guide, regional workshops, software, videos and the NAIC's ``oldie but goodie'' 40-year-old Stock Selection Guide, a low-tech -- but effective -- two-page form developed to aid investors in picking growth companies. Of course, investors are not limited to joining clubs or national organizations to further their networking efforts on the Net. According to Barton Bambi, a spokesperson for the NAIC, individual investors, as well as clubs, are flocking to the free resources available through the Internet and popular on-line subscription services. ``Investors now head straight to PR Newswire for press releases, EDGAR (the SEC's Electronic Data Gathering, Analysis, and Retrieval service) for quarterly reports and Bloomberg for financial news. For the first time, Peoria and East Podunk have access to the same information as the professionals in New York or San Francisco,'' Mr. Bambi says. Those less interested in clubs that would have them as members may decide to hook up with the Chicago-based American Association of Individual Investors, which publishes an investment magazine for members as well as the annual ``Investor's Guide to Low-Load Mutual Funds.'' Annual dues are $49, and members have access to the AAII Web site, with its message and chat boards, along with a comprehensive software library. While a handful of cyberspace clubs exist, most are comprised mainly of friends and/or family. According to Mr. Bambi, there are two critical factors in maintaining any successful investment club: a like-minded investment strategy, which can be determined on-line, and trust, which can't. ``With family members, you usually have some recourse if an investment goes sour. That's just not the case with someone you've met in a chat room.'' Invest-o-rama's Mr. Geisler agrees. ``Trust is the key to any successful club.'' Indeed, his cyberspace club relationship is built on trust -- along with a careful system of checks and balances to insure that no pioneer is tempted to pocket portfolio proceeds before setting out for parts unknown.
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