Medford mail tribune., December 06, 1959, Image 46

Family Weelcly
December 6, 1959
Here is the inside story on investment clubs,
which many families are finding the key to
financial success-thereby sharing in the
growth of American industry
ttBJ SI Mi MI tdh
Investment clubs have sparked
an active interest in Wall St.
The bustle of activity on the
floor of the New York Stock
Exchange is not so remote as
it once seemed to many people.
mom
A heavy wind stripped a small Massachusetts
church of its steeple two years ago. The con
gregation was too poor to rebuild, so a group of
its members decided to contribute their own capi
tal to a cooperative effort.
Paying only $10 each per month, they began
to meet regularly to study the stock market and
to invest in stocks. Any day now, they are confi
dent, their church will have its new steeple,
bought with dividends and profits on their invest
ments, and they will have their money back.
For several years now, people have been getting
together to make money via investment clubs.
Outstanding about the mushrooming growth of
investment clubs, now estimated at 15,000, is that
most of them are making money. This is no lucky
accident. A part of almost every club program is
an earnest study of corporations in which invest
ment is proposed, a course in the fundamentals of
business economics, and the help of a skilled
financial advisor.
Probably the outstanding success is the Mutual
Investment Club of Detroit. In 1939, when its
members were students at Western High School,
they formed a club, got a financial advisor, and
embarked on a program. Since then, they have
paid in about $35,000. If they had chosen to sell
out at the end of 1958, their assets would have
totaled $123,000.
Younger clubs have done well on many famous
stocks. The United Investment Club of South
. Bend, Ind., organized in 1954 is composed of
housewives and mothers. Their best buy has been
a drug manufacturer, Schering Corporation, which
they bought at $27 per share. Their profit amounts
to several hundred percent.
Red Arrow Associates of Rice Lake, Wis., is
three years old and has 15 members who have
contributed $4,200 for stocks that now are worth
more than $6,000.
til
"Investment clubs are effectively putting ownership within the reach of many, and
they are doing it in a way that is practical and educational. By their size, soundness,
and success, these clubs have earned a significant place in our arsenal of investment
techniques particularly for the apprentice investor."
Keith Funston, President, New York Stock Exchange
4 Family Weekly, December 6, 1959
The Twenty-five Club of Oakland, Calif., was
formed in 1955. Its profit tops 50 percent.
Not everyone, it must be noted, enters the Wall
Street sweepstakes with complete dedication to
solid principles. One jovial squad of bachelors, as
their first step toward financial independence,
chose to buy a race horse. When this noble steed
put them in the red, they switched to another
growth proposition, a young lady of some talent
who aspired to movie queendom, and sent her to
Hollywood. Unfortunately, she ran even more
slowly than their thoroughbred, and they were
soon reduced to the ignominy of investing in blue
chip stocks. Sadder and wiser today, they are now
in the black.
One Detroit club called Midas failed for a
strange reason: it was too smart. Its membership
included such financial eggheads as a business
professor, the comptroller of a department store,
and a clutch of canny businessmen. So they
studied stocks scientifically with graphs, charts,
and curves. Finally, they decided to invest only
in growth stocks, but they were so intellectual
about it that they argued for hours about the defi
nition of "growth." So it went at every meeting.
The result? "We got out of Parke Davis before
it started to move," says George Moroson, a
former member. "We sold Wrigley before it
merged with ACF Industries and increased its
value. We bought and sold like crazy, losing
money on brokerage fees; while at the same time
another club of nine girls we knew was making
money hand over fist. One girl would see the
'$64,000 Question,' like the show, and get her club
to buy Revlon stock. We felt this wasn't scientific
and waited, and Revlon went up."
Midas folded and Mr. Moroson got back $95 of
the $120 he put into it, but the girls kept investing
and winning.
Luck plays a part in such profits, but a much
STOCK EXCHANGE ENDORSES CLUBS
larger role is played by good judgment and train
ing. This training comes to most clubs from the
National Association of Investment Clubs, which
was formed in 1951. Its advice:
1. Invest every month without fail.
2. Reinvest all dividends.
3. Buy growth companies.
George A. Nicholson, Jr., chairman of the NAIC
Advisory Board and head of the investment-counseling
department at Smith, Hague, and Co., De
troit, says: "We are confident that most members
can accumulate $10,000 or more in securities
through their club. Such accumulations can be
useful in providing stability for the family, educa
tional opportunities, and a happier retirement.
Three years ago, the New York Stock Exchange
explored the movement and discovered:
Investment clubs exist in every state, with
Michigan, New York, and Ohio leading.
Stocks owned by clubs have a value of more
than $50 million.
The average club has 15 members who invest
$10 per month.
Church and religious groups have formed al
most 100 clubs; educational institutions, more than
200; fraternal orders and social groups, 1,166;
community and neighborhood groups, 1,661.
All-male clubs keep better purchase records.
All-female clubs are better at buying good
stocks at low prices.
"Men are gamblers out to make a quick buck,"
says New York investment counselor Spencer
Grean. "But the women want that old washing
machine." ,
Some Wall Streeters are afraid that a further
decline in the market may stampede thousands of
club members into dumping their stocks overnight.
"Not at all probable," says Thomas O'Hara, chair
man of the trustees of the NAIC. "We've lived
through several slumps, and we find that members
simply turn to a study of what companies in what
industries are most likely to do best in a recession.
A Chicago broker complained, "These clubs in
vest only a couple hundred bucks a month, but
they're constantly calling for reports on com
panies, advice, guest speakers, and other services.
The commission isn't worth it."
On the other hand, a young broker, looking for
new customers, said, "To a fellow like me, this is
LET'S GET
a real promotion gimmick. I've done all right
getting individual accounts from the clubs I work
with."
Club members agree that being an investor is
wonderful. A grandmother reports: "For the first
time in my life, I'm able to take care of myself
financially without having to fool around with a
lot of bankers."
An old pro at investing says, "I'm sharpening
my wits in every meeting and learning about new
opportunities I might have missed. Doesn't cost
me a penny extra."
- As for the New York Stock Exchange, Keith
Funston, president, is a missionary for more of
what he calls "people's capitalism," or the pub
lic's ownership of American industry. Though one
out of every eight adult Americans now owns
stocks, he wants more. If those added investors
are in clubs, that's dandy with Mr. Funston. "In
vestment clubs, when organized with a sincere de
sire to learn not to get rich quick offer a way
for people to learn investing firsthand," he says.
"When a club succeeds in developing regular, in
formed investors, everyone benefits."
Echoing his sentiment is this statement of its
educational goals by the NAIC:
1. To provide investment-club training for mil
lions of Americans, for wise investment is the life
TOGETHER
a eat aai
by Curtis Mitchell
A typical investment club is
this one in Western Springs,
Illinois, known as the "Wigs."
The women members have their
money in blue-chip stocks. In
this town alone, 8 clubs exist.
blood of progressive capitalism.
2. To assist thousands of Americans to acquire
$10,000 in stocks, for personal security engenders
self-reliance.
3. To help self-reliant people of other nations
learn investing, for private ownership of local and
world-wide business is the path to higher living
standards and lasting peace.
As never before, the time is ripe for the average
man or woman to begin to learn the art of
investing. Free assistance is available. So is ex
pert financial advice.
The next step is to follow the pattern of ex
perience of other successful organizations. This
pathway is clearly outlined in a manual that may
be obtained from the National Association of ln
vestment Clubs, National Bank Building, Detroit,
Mich., and also in a volume at your bookstore,
"How to Organize and Run a Successful Invest
ment Club" by Raymond Trigger.
Many new clubs choose to affiliate with the
NAIC because of its useful services. First-year
membership costs $10 for registration fee, plus $1
dues for each member. In return, the club receives
at cost an accounting kit, corporation analysis
data, and a monthly bulletin. Membership in
AMD MAKE
SOME MONEY!
NAIC also protects a club against loss, up to
$25,000, due to dishonesty of a member.
Once a year, NAIC holds a national convention
calculated to satisfy the hunger of even its most
ardent investors for facts, figures, and fancies. Last
year, special trains, buses, and chartered planes
carried entire clubs to Chicago for two days of
study and high jinks. There, they listened to sober
warnings that whatever goes up comes down, and
to technical discussions on how to make money on
that fact of life.
By night, clubs sat around tables in friendly
groups and played the investor's favorite game of
"If-I'da . . ." "If I'da bought Texas Instrument, I'd
be rich." "If I'da only held onto my Thiokol. . . ."
Edmund W. Tabell of Walston and Company,
Chicago, in delivering an address on "The Outlook
for the Stock Market," provided two of the biggest
"If-Ida's" of all time. He spoke of an imaginary
investor with $10,000 who, if he bought "Standard
Oil of New Jersey in June of 1949, held it until
January, 1952, switched into General Electric, held
it until August, 1954, bought Aluminum Company
of America, sold it in May of 1956 to buy IBM,
which he could have sold in June, 1957, and
bought Parke Davis, his $10,000 investment would
have reached a 1958 value of $496,000 after paying
all tax.es on previous transactions."
He then added this topper: "If the investor had
put his $10,000 into Dana Corporation in June ofN
1949, held it until April, 1953, then switched into
Outboard Marine until June, 1957, and then into
Lorillard, his holdings would have a value of
$1,500,000."
From $10,000 to $1,500,000 is quite a leap, and
Tabell was making a valuable point, of course.
"The only thing these fantastic figures prove," he
said, "is that there are more profit opportunities
in selecting the right individual issues than in
attempting to catch the swings in the market."
No wonder investment clubbers come home
from such meetings filled with determination to
uncover the future Lorillards, Outboard Marines,
and Danas. No wonder clubs show greater skill
the longer they work together, and their-profit
swells in relation to their experience. -
No wonder, indeed, that new clubs are springing
up wherever people work and live and have $5 or
so left at the month's end to invest in the dream
called America.
Family Weekly, December 6. 1959 S