Table of Contents



Getting the Most from This Book
Part 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

Part I: Flying Over Club Country

Chapter 1: Getting Acquainted with Investment Clubs
Defining Investment Club
Measuring the Payback from Joining a Club
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?

Part II: Starting an Investment Club

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
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

Part III: Running an Investment Club

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

Part IV: Finding the Right Investment Approach

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

Part V: The Part of Tens

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