Members of LIPS, a Hawaii investment club, discuss the holdings in their $200,000 portfolio at a recent meeting. Photo by Kathryn Bender, Star-Bulletin
Members of LIPS, a Hawaii investment club, discuss the holdings in their $200,000 portfolio at a recent meeting. Photo by Kathryn Bender, Star-Bulletin
Familiar names these days to Ann Wills.
But more than 10 years ago, when she was asked to join a group of women in a new club, the part-owner of the Hobby Company was "definitely a novice" when it came to figuring out which names could translate into more money in the bank - her bank.
Today, Wills is president of LIPS - Ladies Investing and Perhaps Speculating - one of two original members of a local investment club known for its savvy members and organized plan of investing.
"LIPS' basic investment guideline is to buy quality growth companies with estimated annual growth rates of 15 percent minimum, thus doubling an investment in five years," Wills said.
The club, in recent years, has leaned toward technological, pharmaceutical and health care companies. "While we realize our positions are minuscule, we like to think of our purchases as ownership in the chosen companies rather than simply stock picks," Wills said.
LIPS' portfolio, as of Feb. 29, stood at $201,600. If you had joined in the fall of 1985, paying $500 to get in and $100 a month as required by the club's bylaws, the value of your investment of about $13,000 would have been $30,284 through February, Wills said.
LIPS is one of about 25 to 30 clubs in Hawaii that belongs to the National Association of Investors Corporation, according to Nina Hollyer, president of the NAIC's Aloha Honolulu Council.
The NAIC, formed in 1951, represents more than 21,000 clubs, averaging 15-16 members each. According to surveys, an average club has earned 12 percent compounded per year for the life of the club, said Kenneth S. Janke Sr., president and CEO of the NAIC, based in Michigan.
Younger clubs tend to do well, but the older a club gets, the more realistic the figures become, he said. Still, his own club, more than three decades old, has a portfolio worth $3.2 million.
Investment clubs have risen steadily in popularity - from 13,000 members just two years ago - primarily because of the bull market, Janke said. Numbers fall predictably when the market isn't as bullish.
Joining a club "serves as a great introduction to the stock market," Janke said. You can read everything about the market and take courses, but "until you put your money at risk, you don't learn."
The NAIC is mainly an educational forum, set up to provide clubs or individuals with the means to "intelligently study the purchase and sale of securities."
Different clubs will have different philosophies, but in general, the NAIC's advice is to invest regularly, invest for the long term and double your money in five years.
The Aloha Honolulu Council of the National Association of Investors Corporation periodically sponsors workshops and seminars. This year, for the first time, it will hold an Investors Fair: Learn about investing
Tips on stock selecting: 9 a.m. to noon, June 15, Ward Warehouse conference room. $15 fee. Limited class size.
How to use the NAIC's stock selection guide: Three-part training seminar the first three Saturdays in October. Ward Warehouse. Fees and times to be announced. Limited.
Investors Fair: Presentations to be made by Alexander & Baldwin, Bank of Hawaii, Hawaiian Electric, Cyanotech, as well as Aflac, Crown Resources, AES Corp., Intel Corp. and Pfizer. Plus exhibits by other companies. Keynote speaker: Charles Carlson, editor of DRIP Investor newsletter. Nov. 16, Hilton Hawaiian Village. $35, including lunch. Call 732-9542 for information.
Because she was a stock novice, Wills said she was attracted to LIPS by the fact that some of the organizers were not. In fact, while new clubs tend to have only one or two members with some kind of investment knowledge, after five years, that's turned around, with all but one or two investing on their own, Janke said.
That's the case with LIPS, where most of the 20 members have outside investments in addition to partnership in the club, Wills said. Ranging in age from 25 to 55, members include a judge, stock broker, lawyer, author, real estate agent, real estate developer, banker and retail entrepreneur.
"If I were making a recommendation (to new clubs), I would highly recommend using a stock broker," she said. "We have been successful not only by having a stock broker in our club, but we also have had (an outside broker) ... The downfall of some clubs may be there was not enough expertise."
Hollyer, 36, a travel agent, was recruited by a friend to join "Profit and Gloss," also all-female. Putting together a club requires not only a mesh of personalities, but also of philosophies, she said.
When Janke joined NAIC 36 years ago, 90 percent of investment club members were male. Today, women make up about half the membership, he said, and clubs are pretty evenly split into all-male, all-female or mixed.
Hollyer's club, down to 13 because of recent moves, is made up of "all different kinds of professions," which is what the NAIC encourages. It meets once a month but is less formal than LIPS and "not too strict," she acknowledged. Members pay $250 to get in, plus $50 a month. Everything is reinvested, as in most clubs, and no one gets a payment unless they leave. (Janke's club, however, allows yearly withdrawals, with one member taking payments twice a year for family vacations.)
Most clubs also limit membership, generally to 20. "Any more, you get too many different opinions," Hollyer said.
Since investment clubs are long term and may last a lifetime, members should first of all enjoy each another's company. It helps to also have a membership reflecting a diversity of occupations, ages and interests, according to the National Association of Investors Corporation: How to start a club
Philosophy: Members should agree on an investment philosophy. The NAIC's recommended goals are to buy growth stocks, reinvest all dividends and capital gains, and invest regularly.
Type of organization: Usually a partnership is recommended. A partnership agreement has to be signed by all members and a copy placed on record with the broker/brokers selected.
Pick a distinctive name.
Elect officers.
Broker: Select a broker, preferably one that has worked with clubs, but don't expect him/her to do all the work. Members should find their own resources for finding stocks.
NAIC membership: Joining the organization gives access to an investment magazine and tools/kits for evaluating stocks.
Ryan Muraoka, 39, a salesman for Proctor & Gamble, organized MIT - Millionaires in Training - in October 1994, after thinking about it for 10 years.
"I wanted (members) to be serious ... It's like a part-time job - they have to put in at least a few hours a month," he said.
Members are in their 30s and 40s and include people in banking, telecommunications, engineering and real estate.
Muraoka elected to have it all male because he wanted active participation of all members and feared a husband-wife team would result in one passive member. Members pay $100, plus $100 a month. The monthly contribution was raised from $50 "to get more commitment," Muraoka said.
Like LIPS, and Profit and Gloss, MIT is partly a social club, meeting once a month in a private room at the Players sports club. But no one forgets that "most importantly, it's to make a profit," Muraoka said.
"We're looking at the long term because most of us are in our 30s and are looking at a minimum of 20 years down the road," he said. MIT today is "just about breaking even," following this philosophy: Invest half the money in solid, blue-chip stocks through DRIPs - dividend reinvestment plans; the other half in more speculative, aggressive, niche companies. It's the latter the club is counting on "to make the big bucks," Muraoka said, laughing.
He thinks clubs are a good way to get into the stock market, especially for women.
"I read somewhere that 80 (percent) to 85 percent of women, at some point in their lives, even if they are married, will have to handle finances on their own," he said. "I try to advocate that everybody can learn (about investing) as long as they have a willingness to learn."