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Investing Women

Club members reap dividends by pooling money, knowledge

When the Great Assets Investment Club meets, the dozen or so members talk about their kids and husbands, their careers and vacations. They compliment a new haircut, share impressions of a new restaurant. But that's just in the first 10 minutes.

Once the greetings are over, the women get down to business — the business of investing in stocks, business that has increased the club's portfolio by more than 40 percent in the two years since it was formed.

"There is a social aspect to the club," said vice president and education officer Peggy Lander. "But our first goal is to learn how to be better investors and combine our knowledge."

In that way, the Salt Lake club is a lot like thousands of women's investment clubs across the country. Clubs for women have increased both in membership and the return members are getting on their investments. And they're often doing better than men's clubs.

The National Association of Investors Corp. (NAIC), one of the oldest and largest nonprofit associations offering tips to help new investors get started, reports that the number of NAIC women-only clubs increased 25 percent from 1988 to 1998 and the number of men's clubs decreased by about 17 percent. NAIC has a membership of nearly 37,000 clubs, up from 923 clubs in 1955, and 67 percent of the members are women.

And with names like Feisty Broads, Sunriver Women and Mad Money Mommas, women's investment clubs throughout the country aren't doing too badly, thank you. The lifetime annual earnings rate of NAIC women's clubs went from 17.9 percent in 1997 to 32.1 percent in 1999, while the earnings realized by men's clubs increased from 15.6 percent to 23.2 percent in the same two years.

Lander said her club started with eight members with varying degrees of knowledge about stocks and investing but with one common objective: to learn more.

"The first thing I did was bring in a stock page because most of the members didn't even know how to read a stock page," Lander said. She had been investing and studying the stock market for 15 years, and club president Sally Archer had a good investment background. They got the others reading the Wall Street Journal, and they expanded their expertise from there.

The members are mostly career women with families, a couple work at home and have ready access to online stock reviews.

Now the club has expanded to 14 members, and a number of them follow the market and individual stocks daily. Each member is assigned to keep tabs on the stocks the club owns and each does research on one or more stocks they might want to buy. Members each contribute $50 a month, and when it has $2,000 to $3,000, the club buys.

"As a group we have more buying power; you're not able to do much with $50 on your own," Lander said. "Plus, if you buy a stock for $2,000 of your own money and it drops 20 percent, it's a big loss, but with the group, the loss is less."

The idea of more heads being better than one is echoed by Patty Florence, president of the 6-year-old Women of Interest investment club, also in Salt Lake City. Its members are mostly Realtors, and several work at the same real estate firm.

"We're all on the same page philosophically, but we bring different things to the table; it's good to have diversity in thinking," Florence said. "A lot of women feel they don't have the experience to do it on their own, but being in a group gives you strength."

Jonathan Strong, manager of membership development for NAIC, wrote in Better Investing magazine that women in clubs tend to look at a "broad picture" of the prospects of a specific company or the general trends in the stock market.

A 1997 University of California-Davis study found women tend to trade stocks less often than men, evidence of a long-term investment philosophy. And in holding stocks for longer periods, the women incur smaller commission costs.

"Women also tend to be excellent students when approaching investing," Strong writes. Instead of acting on the latest "hot tip" or market news, they collect company information, data and research and thoroughly read and analyze it as a group before making a decision whether to buy or sell.

Most of the members of Women of Interest are single women with well-established careers who started out as friends and golf partners before going into the business of investing together.

"We were raised in an era when men made decisions," Florence said. "But we're extremely capable, and women are finding that out."

The members of Women of Interest and Great Assets didn't start out to make a lot of money, but their strategies of learning all they can and then making group decisions after much discussion and debate have paid dividends in their portfolios.

"We've had a target of at least a 15 percent gain on every stock, but we've exceeded that," Florence said. "We've lost on some, but the average is way above that."

Lander said some of the Great Assets technology stocks have done "very well," while some in the retail category haven't done as well, but overall the club's portfolio has gained about 47 percent.

"We have a nice base of safe stocks," Lander said. "Now we can look at some that are more risky."

Both clubs follow strict rules and are set up as legal partnerships, required to file tax returns under business-tax laws. Prospective new members are screened, and the current membership votes on whether to allow a particular woman to join. A new member buys her share when she joins. Currently, a share in Women of Interest is about $3,000, and new members of Great Assets buy in at a bit less than that.

Most of the clubs' members have started investing on their own in addition to their club investments

Though they're not social clubs, the members do benefit from each other's company in ways that don't show up on the balance sheet. They have a couple of parties a year, and some of the members socialize outside the club meetings.

"Getting together is also social therapy," Lander said. "And it's a lot cheaper than counseling."

E-mail: karras@desnews.com