| If the investment club strikes you as an ideal answer | | | | In the first flush of enthusiasm, it is possible to be |
| to your needs and requirements, there here are | | | | swayed by the mass of beautifully printed material |
| some points to consider. | | | | available about this company or that. Set up your |
| Do not attempt to form a club until you have | | | | standards in advance: know what you are looking for |
| investigated its status under Federal, state, and local | | | | in terms of price and dividend trend, in terms of |
| laws. The Association of Stock Exchange Firms is | | | | products, in terms of capital structure and |
| attempting to win passage for a model statute that | | | | management. |
| will simplify and clarify the status of investment clubs | | | | Note: Changes in corporate management are not |
| and in some states is has already been enacted. | | | | automatically good. Very often a new slate of |
| In most states, however, a variety of laws govern | | | | officers, or some retirements, will bring in fresh blood, |
| the formation and operation of a club and its status | | | | but there is no way of knowing immediately whether |
| as a partnership, corporation, joint venture, or | | | | the new men are as capable as the ones they |
| whatever. The difficulties are rarely insurmountable, | | | | replaced. |
| but complications can be avoided if your club will | | | | There is nothing wrong with over-the-counter stocks |
| check with an attorney before becoming involved | | | | as such. But many clubs have found that the fluidity |
| financially. | | | | of the market on the big exchanges, and the |
| Along the same lines, your club can avoid awkward | | | | certainty of daily reporting of stock prices, makes |
| misunderstandings if the ground rules are clearly | | | | investment in Big Board issues considerably more |
| established from the start. Provisions should be made | | | | satisfactory. |
| for the death or departure of a member. Each | | | | It is easy to decide that you've got a natural bent |
| investor should be able to withdraw his share of the | | | | for investment if your first purchase begins behaving |
| club's assets at any time. | | | | nicely. Don't be fooled. A great many stocks have |
| The position of newcomers or replacements for | | | | been behaving nicely for some years now. In many |
| members who have dropped out or moved away | | | | ways it's difficult to pick one that doesn't. Enjoy your |
| should be defined. Does the new member participate | | | | success, but keep studying and keep learning. |
| on an equal basis in the accumulated assets of the | | | | Fight the tendency to make too many switches in |
| club upon payment of his first $10? Or should he be | | | | your portfolio, particularly in the early stages. |
| expected to match the total investment of his | | | | Remember that the commissions on getting in and |
| predecessor? | | | | out are going to eat into your gains. Furthermore, |
| Run your meetings briskly. Expect to give the | | | | impatience is likely to boost you out of a stock |
| business at hand your full and earnest attention for | | | | before it has a chance to show its worth. |
| two hours; investment is too serious to be brushed | | | | Remember, too, that from the tax angle, you'll be |
| over in less. On the other hand, be organized. Don't | | | | paying on gains as straight income unless you've held |
| let meetings drag on or founder in confusion. | | | | the stocks for six months or more. |
| Members will start resigning out of boredom. | | | | Finally, stay friendly. Money can get people quite |
| Insist that your investigation committees do their | | | | excited. Money can come between friends. You'll |
| homework. And that they stay on the point. These | | | | have a better chance of success if your members |
| are elements of good reporting in any field, and are | | | | are friendly on grounds other than investment, if |
| not hard to learn. Clarity and precision will not only | | | | everyone understands clearly that there are hazards |
| make reports more interesting, but help you to make | | | | as well as profits, and if everyone does his best to |
| your decisions confidently. | | | | become knowledgeable in the field as soon as is |
| Absenteeism plagues almost every organization, and | | | | reasonably possible. |
| you will have to find your own way to lick it. As | | | | It is the mistakes of ignorance that cause trouble. |
| noted, the proxy at least assures a vote by the | | | | Many clubs have had some hot times because a |
| whole membership, but it has its disadvantages. The | | | | member couldn't understand why the group sold |
| Williston club has instituted an automatic $5 fine for | | | | short of the top or why, with the good old Northern |
| missing a meeting, regardless of the excuse. Some | | | | & Southern Railway running right through town, |
| clubs interpret a certain number of absences as | | | | everyone insisted on buying Gulf Oil. |
| evidence of disinterest and as grounds for dismissal. | | | | Stay in close touch with your broker. He can help |
| As for the club's performance as an investment | | | | spell out some of the fundamental ABC's until you |
| group, it will, at first, leave something to be desired. | | | | can paddle on your own. He also should have, or be |
| There is something heady about the manipulation of | | | | able to get, information bearing on the problems and |
| money and the challenge of out-guessing the market. | | | | experience of other investment clubs, which can aid |
| You will find, as you start out, that it is easy to be | | | | you in steering around pitfalls.. |
| overly enthusiastic about one stock or another, or, | | | | Otherwise, every piece of information and advice in |
| because your fund is relatively small, to concentrate | | | | this article applies as rigorously to investment clubs as |
| on low-priced issues. The enthusiasm may be | | | | to investing individuals. |
| warranted, and your low-priced issue may be solid, | | | | Use good investment and Forex software to help |
| but try not to let judgment be colored by passion, | | | | you research how particular shares and currencies |
| and never choose price over quality. | | | | have performed. |
| Make your committee reports as realistic as possible. | | | | |