Foreword
Getting the Most from This BookPart I: Flying Over Club Country Part II: Starting an Investment Club Part III: Running an Investment Club Part IV: Finding the Right Investment Approach Part V: The Part of Tens Icons Used in This Book
Chapter 1: Getting Acquainted with Investment Clubs Defining Investment Club Measuring the Payback from Joining a Club Perspectives Safeguards Performance Affordability Purchasing power Deciding Whether an Investment Club is Right for You Measuring the fit between you and a club Are you ready for club membership? Networking Nationally through NAIC It's Not a Perfect World: The Trouble with Investment Clubs Dealing with overbearing members Revisiting the Beardstown Ladies
Chapter 2: Looking Before You Leap Examining Your Motives Starting Out Smart -- 20-Year Plans Keeping your expectations down to earth Staying flexible as you settle into a routine Building Your Clubhouse: The Four Elements of Success Solid educational plan Strong investment plan Thoughtful operations strategy A sense of fun
Chapter 3: Finding and Joining a Club Finding a Club to Join You gotta follow the rules . . . Seeking help from your local NAIC Chapter Last resorts to finding a club Look Hard Before Signing On Finally Ready to Make a Commitment?
Chapter 4: Laying the Groundwork for Your Club It Isn't All Fun: Scanning the Downside Starting Out on Solid Ground How NAIC can help you start a club Looking at other online resources Finding and Recruiting Members Key attributes of successful club members Recruiting only men . . . or only women . . . or only family Looking for members in all the right places Producing a Club Information Packet Choosing Your Club's Type Pooled assets club Self-directed investment (SDI) club Defining Your Club's Mission
Chapter 5: Building a Structure for Your Club Planning Your Introductory Meeting Finish looking for possible members Choosing a meeting place and time Preparing your meeting materials Conducting Your Introductory Meeting Sample introductory meeting agenda Making the commitment Handing out homework Getting Down to Business -- Your First Regular Meeting Defining Your Investment Approach Forming an Online Investment Club Setting up online Conducting meetings online Helping Kids to Start an Investment Club
Chapter 6: Taking Care of the Legal Stuff Step One: Making the Club Official General partnership Limited partnership Limited liability partnership Limited liability corporation Corporation Voluntary cooperative association Creating Rules and Procedures Drafting your club's partnership agreement Creating your club's bylaws Nailing Down Your Club Philosophy, Policies
Chapter 7: Following the Money: Startup Costs, Accounting, Banking, Brokering Covering the Initial Costs of Clubbing Becoming an NAIC member Acquiring accounting manuals and club accounting software Educating the members Paying for outside classes and workshops Paying for legal advice Registering with state and local agencies Paying the Tax Man Getting your tax ID number Sorting through the taxes you may have to pay Keeping good records -- a must! Introducing Your Club's Best Friend: Unit-Value Accounting Insuring Against Theft Choosing a Bank Finding a club-friendly, conventional bank Doing your banking through an online brokerage Opening an Account Choosing a Broker Comparing full-service, discount, and online brokers Features of club-friendly brokerages Opening an account at a brokerage Skipping the broker -- using DRIPs and DSPs
Chapter 8: Managing the Ins and Outs of Club Membership Member Responsibilities Attending meetings regularly Researching and presenting stocks Doing their homework Serving as officers Making timely contributions Admitting New Members Testing their commitment Requiring a sponsor Attending several meetings Learning the club's investing strategy Making a presentation to the club Completing a questionnaire Creating a Prospective Member Packet It's a Go: Formally Requesting Membership Submitting to a membership vote Signing the operating agreement Designing a New Member Orientation Packet -- and a Routine Paying the initiation fee Making an initial buy-in Faithfully Executing the Duties of Office Officer responsibilities Requiring each member to serve Term limits Officer rotation Dealing with Member Withdrawals Complete withdrawals Partial withdrawals Withdrawal fees and limits Paying off a withdrawal
Chapter 9: Holding Successful Meetings Planning for Smooth Meetings When to meet Where to meet Encouraging regular attendance Building the Right Meeting Structure Running your club's first meetings Just say no to endless meetings Following the "Rules" Setting and Following an Agenda 1. Call to order 2. Roll call and quorum 3. Introduction 4. Reading of the minutes 5. Treasurer's report 6. Portfolio and stock watcher reports 7. Member stock presentations 8. Educational presentations 9. Old business 10. New business 11. Announcements 12. Adjournment Keeping Members Attentive and Cooperative Bringing member presentations up to speed Taking Your Club Communication Online Acquiring a club Web site Using e-mail and mailing lists Chat and instant messaging Setting a Social Agenda Holding Your Club's Annual Meeting
Chapter 10: Keeping the Books The Treasurer's Job Resources for club treasurers The assistant treasurer Understanding the Unit Value System Club Accounting, Task by Task Start-up tasks Tasks before each meeting Tasks during each meeting Tasks after each meeting Occasional tasks Year-end tasks Software Makes Accounting Easy An overview of NAIC investment club accounting software (Recommended: Club Accounting 3 from ICLUBcentral) Taking care of your data Online accounting alternatives Doing it by hand (if you must!) Keeping Good Records
Chapter 11: Creating Your Education Program Taking Charge of Education Choosing an education officer Adding education to your agenda Making the most of your resources Planning Your Education Agenda Learning to analyze stocks Choosing other topics of interest Inviting guest experts Finding other guests Don't Forget the Fun! Pop quiz, anyone? Games and puzzlers Hitting the road, not the books Taking Education Online
Chapter 12: Dealing with Special Club Problems Settling -- or Avoiding -- People Problems Dominant and bossy club members Differences of opinion about the portfolio Partners who want to be "silent" Political-social beliefs influencing stock selection Taking Control When You Face Financial Problems Coping with negative returns in your portfolio Discovering bungling and fraud, inside or outside the club Problems with the club audit Managing Membership Situations Transferring a club account Coping with a divorce Missing-in-action members Settling accounts when a member dies Avoiding problems with beneficiaries Buying out a departing member Terminating a member
Chapter 13: Deciding on a Basic Plan: Buy and Hold Stocks, Reinvest Profits The Great Debate: Stocks versus Mutual Funds Where mutual funds fall short Always an exception to every rule . . . Making the Case for Buying Individual Stocks Four reasons to 'buy and hold' Making growth your goal Making the Stock Market Work for You Staying fully invested in stocks Investing Regularly Harnessing the power of dollar cost averaging Reinvesting your profits Sticking to your guns
Chapter 14: Finding and Studying Stocks Making Sense of the Media Deluge Should you trust that guru? Helping club members become better investors Joining an Online Community Welcome to the I-Club-List Dropping in for a friendly chat Using a message board Remembering your manners Screening Stocks Searching for gems with your computer Sidestepping some sources Analyzing Stocks Using the NAIC Stock Selection Guide Harnessing software for the tedious stuff (Recommended: Investor's Toolkit from ICLUBcentral) Digging Deeper Turning to the company for help Tapping government data banks Other places to look Comparing Stocks to Find the Real Winners
Chapter 15: Managing and Tracking Your Portfolio Rule One: Diversifying Reducing risk -- smoothing the bumps Don't take diversification too far Adding Some Variety to the Portfolio Diversify by industry and sector Diversify by company size Measuring size by market cap -- maybe Managing Your Club Portfolio Keeping on top versus just keeping records Tracking your club's portfolio Using PERT: Portfolio Evaluation Review Technique Dealing with the Dogs of Your Portfolio Visiting the doghouse every now and then Sending those dogs to the pound Selling winners How are you doing? Checking your returns
Chapter 16: Making Team Decisions to Buy Stocks Forming a Team of Specialists Applying the team approach to stock research Buying your club's first stock Managing Your Club Portfolio Duties of the stock watchers Choosing stock watchers Making regular stock watcher reports Outlining a Stock Watcher Report Sales growth Earnings per share (EPS) growth Pretax profit margins and growth Management's ability and competence Breaking news Current valuation Future outlook Overall recommendation PERT update Outlining a Yearly Stock Watcher Report Overview of the annual report Overview of the proxy statement Updated Stock Selection Guide
Chapter 17: Rescuing a Failing Club -- Or Not Diagnosing Your Club's Ills Before Tossing in that Towel Rescue strategies for clubs in distress Merging with another club -- beware! Splitting your club in two Terminating when there's no other choice Reinventing your club When All Else Fails . . . Shutting Down and Closing Out the Books
Chapter 18: Ten Questions to Ask Before Buying a Stock What does the company do? How has the company grown in the past five to ten years? What are the company's pretax profit margins? What is the current P/E ratio of the stock? What's the dividend yield of the stock? What is your target rate of return from the stock if you buy it today? Does the current price allow for your desired return during the next five years? What's the worst possible likely outcome if you buy the stock today? How does the company compare to its competition? How does a new stock fit in your existing portfolio?
Chapter 19: Ten Questions to Ask Before Selling a Stock Is the stock's future fading fast? Are you being rash, emotional, or reactive? Will your club's portfolio still be diversified if you sell? What are the tax ramifications of selling? Are you selling because of the stock -- or because of the market or the industry? Is the stock overvalued or undervalued at its current price? Are you 'cutting your flowers and letting your weeds grow'? Are you selling just because the stock's price hasn't gone up? Do you have a better use for the money after you sell? When selling to pay off a member withdrawal, have you considered all the options?
Appendix Sample Documents and Forms