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