A catchy song from my childhood keeps racing through my head to the lyrics “Beardstown Ladies sing your song, doo-dah, doo-dah”. I don’t know why! Perhaps it has something to do with the subject of investment clubs and a group of elderly female statesmen from Beardstown, Illinois (a bunch of old broads) racing toward their goal of getting rich. I think the original song was “Camp Town Races”.
As most of you know, Christopher organized a group of buddies from work along with a few “outsiders” to form an investment group called the “9-Wannabees”. It is not difficult to figure out the intent of the group name. They all “wannabee rich”. More about how Chris’ group is working out in a minute.
Back to Beardstown. In 1983, 15 women from Beardstown, Illinois organized an investment group called cleverly “The Beardstown Ladies”. They were mostly retired school teachers, home-makers, bank employees and farmers. There were a few actively employed insurance agents and real-estate sales reps. They met monthly and each contributed $25 per month. For those of you who don’t know stock market history, 1983 was the beginning of a 17 year good bull run with stocks averaging over 20% growth per year compounded. These wise old ladies probably could have picked stock by throwing darts at a dartboard and been successful. In the year 1991 they grew their fortunes by over 59%. Incredible numbers. When they met, they shared research of potential new stock purchases. They ate cake and baked dishes that they brought along. They talked. They ate. They talked. They ate. Did I mention they talked. It was like an old fashioned quilting bee and they were making money besides.
In 1994, a newspaper reporter found out about the successful investing of the Beardstown Ladies and got a few of them scheduled for the Donahue Show in New York. The rest is history. They became famous and have now published several books. The first book called the “Beardstown Ladies” sold over 500,000 copies. Not only were they making money on investing but now they were making it on selling books and also being paid for personal appearances. Could life get any better.
Well it turns out that the investment returns were not quite a good as people thought. The Beardstown Ladies were not real good with math and they included the $25 per month they were each investing in club as “investment return”. You can’t do that. That is like Deb investing $10 one month and when she invests $10 the next month, she calculates 100% rate of return. They is no return on her investment, she has just set aside $20. So the Beardstown Ladies got it wrong. Never-the-less, they were still very successful and they will tell you it was the best thing they ever did.
In my view, an investment club is a way to (1)save money on a regular basis, (2)learn about the stock market, (3)make investments that hopefully lead to solid growth of your investments, (4)share stock research with others, and (5)did I mention having fun.
Chris’ investment group (9-wannabees) started in January of 2003 and it invests money on a weekly basis so that parting with the money is easier because it is small chunks. After 2.5 years, one member has dropped out and the club has picked up a few new members. I think there are now 10 members called “the 9-Wannabees”. Huh! There are about 14-15 different stocks owned by the club. There have been winners and losers. After the first two years, the average annual return to the club was over 10%. The biggest winner is Sunoco which was purchased at two different times and on a $2000 investment is worth over $4000. Now listen to this, Sunoco sponsors NASCAR racing in a big way and one of the members figured that of all the oil companies we could buy, Sunoco might have an advantage. Hey! It worked.
Investment clubs can be formed in many ways. With todays computers, electronic communication is a an “instant away”. Families could form investment clubs. Your mom has suggest forming an Andrews family investment club, pooling money and learning together. Silly! Silly!
Investment clubs can be interesting but they are not for everyone. There can be some very heated meetings especially when there are strong personalities involved.
Beardstown Ladies worked.
9-Wannabees is working.
Just thoughts!
Love,
Dad (Just Chas.)