Since the last club update, most of us have experienced some significant financial changes. In light of this we have decided to suspend contributions to the club for the next four months while things sort themselves out.
This doesn't mean we'll be abandoning the blog--to the contrary we'll be trying to keep up daily posting and making it as worthwhile and interesting as ever. We'd really appreciate any comment you guys could leave, telling us what you like or don't like about the posts so we can tailor some of the content to what you're interested in!
Choosing to invoke hardship was something the club didn't take lightly, but thankfully the entire club agreed on the procedure. Also helping out was the fact that we spelled out hardship conditions and voting procedures in the General Partnership--just another example of how a well written GP can cover your club in a sticky situation.
Right now we're taking away the possibility of further capital investment, but we hope to use it as an opportunity to continue to work on bylaws, the blog, and further educate ourselves so that when we are ready, we can pull the trigger on the next big purchase.
Add to that a bit of good news, as GE went up 1.46 today, and we're feeling that we're on solid ground.
Showing posts with label investment club. Show all posts
Showing posts with label investment club. Show all posts
Tuesday, March 10, 2009
Tuesday, March 3, 2009
Club Update
We haven't been posting too much about the club lately so here's a quick update:
-We bought GE a few weeks ago when it was at $12.50 (little did we know it would lose 44% of its value in such record times). The club is still confident that this will rebound and make a profit in the long term, but the recent plunge may have delayed that time frame from being a 1 year turnaround to a 2 year turnaround. The financial track record with GE is too long and too strong to get weak in the knees now and give up, the club feels.
-We've been working slowly on bylaws regarding club accounting practices, and look to start writing bylaws on voting and stock evaluation in the next month. After that we need to write additional bylaws about meetings, attendance, adding new members, and more. After all the bylaws are written, we will consider opening the club up to new members.
-We have another salvo of investing cash and are considering where to invest next. Several options are out there, but we're still researching new stocks and opportunities as well. MTW is the leader in the clubhouse, but we're not in a rush to put money into the market right now. This isn't to say that we're afraid or are trying to time the bottom, we just don't feel urgently.
I'll try and make these posts a weekly edition on Tuesdays to give you readers an insight into the car-azy world of our investment club.
Are there any interesting stocks out there that you would like to recommend? Any interesting stories about developing your own club's bylaws?
-We bought GE a few weeks ago when it was at $12.50 (little did we know it would lose 44% of its value in such record times). The club is still confident that this will rebound and make a profit in the long term, but the recent plunge may have delayed that time frame from being a 1 year turnaround to a 2 year turnaround. The financial track record with GE is too long and too strong to get weak in the knees now and give up, the club feels.
-We've been working slowly on bylaws regarding club accounting practices, and look to start writing bylaws on voting and stock evaluation in the next month. After that we need to write additional bylaws about meetings, attendance, adding new members, and more. After all the bylaws are written, we will consider opening the club up to new members.
-We have another salvo of investing cash and are considering where to invest next. Several options are out there, but we're still researching new stocks and opportunities as well. MTW is the leader in the clubhouse, but we're not in a rush to put money into the market right now. This isn't to say that we're afraid or are trying to time the bottom, we just don't feel urgently.
I'll try and make these posts a weekly edition on Tuesdays to give you readers an insight into the car-azy world of our investment club.
Are there any interesting stocks out there that you would like to recommend? Any interesting stories about developing your own club's bylaws?
Tuesday, February 24, 2009
Bylaws-Setting the Table
Our club has recently begun drafting bylaws to go along with the general partnership that we drafted, ratified, signed, and got notarized earlier this month.
The process of drafting bylaws will be long and nuanced, but we really want to make sure that we have our bases covered. As we grow beyond our current four members we want to assure the ideals and goals that we formed the club upon will be passed on to new members--as well as making sure all the legal loose ends are tied up in case of any uncomfortable situations.
No one wants to have to kick a club member out or have someone quit over a disagreement, but if our club stays around as long as we hope, these things might come to pass. It is better to put in the hard work up front in drafting the partnership and bylaws than to rush to expand and then find out we have no adequate recourse to police the club.
Sly has been invaluable in writing the first draft of the partnership and the bylaws thus far, but the rest of the club members will also be writing sections of the bylaws--to make sure that we are all accountable in the legal and logistical foundation of our club.
The process of drafting bylaws will be long and nuanced, but we really want to make sure that we have our bases covered. As we grow beyond our current four members we want to assure the ideals and goals that we formed the club upon will be passed on to new members--as well as making sure all the legal loose ends are tied up in case of any uncomfortable situations.
No one wants to have to kick a club member out or have someone quit over a disagreement, but if our club stays around as long as we hope, these things might come to pass. It is better to put in the hard work up front in drafting the partnership and bylaws than to rush to expand and then find out we have no adequate recourse to police the club.
Sly has been invaluable in writing the first draft of the partnership and the bylaws thus far, but the rest of the club members will also be writing sections of the bylaws--to make sure that we are all accountable in the legal and logistical foundation of our club.
Sunday, February 1, 2009
Starting Your Investment Club.
We started our club with a Bogle-like mindset of minimizing operating expenditures. This mindset unintentionally led to a tiny profit in start-up costs. Here’s what we did.
(1) A How-To Book. Invest in a good book to guide you. We purchased the “Investment Club Operations Handbook” from the Better Investment Community. Cost: $26.95.
(2) Club Address. A nearby P.O. Box. Annual cost: $56.00.
(3) EIN’s/Banking Part I. We arrived at Chase bank to open a business account and were told we needed an EIN. What’s an EIN? It’s an Employee Identification Number issued by the IRS associated with your club. Every investment club is responsible for annual taxes and needs an EIN like individuals need an SSN. EIN’s are obtained free of charge through the IRS at irs.gov. Cost: Free. I called the IRS and their customer service agent was very helpful unlike those at Chase Bank...
(4) Banking Part II. We return to Chase with the EIN and were told we also needed a recognition of Partnership from the county. The Chase agent then handed us a self-contradictory page stating we only needed the EIN. I found myself irritated while Cadillac and crew more calmly found a temporary checking account giving us a $125 opening bonus. Awesome, beating the S&P already. Gain: $125.00.
(5) Partnership. The County Clerk helped us get through the correct forms properly. Cost: $10.00.
(6) Banking Part III. We used the personal account of the last visit to receive an additional referral bonus in setting up the Chase business banking account. Gain: $50.00.
(7). Business Checks. One box of duplicate business checks ordered online. Cost: $15.94.
(8) Trading Account. Scottrade seemed convenient, good for customer service, inexpensive ($7/trade), and included a referral bonus for 3 free trades. Woodcreek has an earlier post describing the various online brokers. Gain: $21.00.
In the end, the net cost of establishing the club was a gain of $87.11. --Schlitz
(1) A How-To Book. Invest in a good book to guide you. We purchased the “Investment Club Operations Handbook” from the Better Investment Community. Cost: $26.95.
(2) Club Address. A nearby P.O. Box. Annual cost: $56.00.
(3) EIN’s/Banking Part I. We arrived at Chase bank to open a business account and were told we needed an EIN. What’s an EIN? It’s an Employee Identification Number issued by the IRS associated with your club. Every investment club is responsible for annual taxes and needs an EIN like individuals need an SSN. EIN’s are obtained free of charge through the IRS at irs.gov. Cost: Free. I called the IRS and their customer service agent was very helpful unlike those at Chase Bank...
(4) Banking Part II. We return to Chase with the EIN and were told we also needed a recognition of Partnership from the county. The Chase agent then handed us a self-contradictory page stating we only needed the EIN. I found myself irritated while Cadillac and crew more calmly found a temporary checking account giving us a $125 opening bonus. Awesome, beating the S&P already. Gain: $125.00.
(5) Partnership. The County Clerk helped us get through the correct forms properly. Cost: $10.00.
(6) Banking Part III. We used the personal account of the last visit to receive an additional referral bonus in setting up the Chase business banking account. Gain: $50.00.
(7). Business Checks. One box of duplicate business checks ordered online. Cost: $15.94.
(8) Trading Account. Scottrade seemed convenient, good for customer service, inexpensive ($7/trade), and included a referral bonus for 3 free trades. Woodcreek has an earlier post describing the various online brokers. Gain: $21.00.
In the end, the net cost of establishing the club was a gain of $87.11. --Schlitz
Tuesday, January 27, 2009
No Need to Rush?
For those of us like the four people in our investment club, we view this market like vultures waiting to strike a carcass in the hot desert.
We know there is tremendous value out there in the stock market, and we're excited to start investing with our club's accumulating funds. A number of logistical hurdles still need to be cleared before our club is ready to actually invest in stocks. Some of these hurdles include finalizing the General Partnership, beginning an account with an online brokerage, and perhaps even getting the club accounting software lined up and ready to go.
Some of us are getting restless, viewing this as the best time to buy.
Others of us see no need to rush.
With the recent giant day of layoffs, analysts are getting more and more sour on the 6 and 12 month outlook for the US economy. It can be hard not to when it seems like every other day you know someone who has lost their job. If this is true, there should be great value in stocks in the next 6 months to a year (at the least), and there's no need to rush in quite yet.
On the other hand, the stock market has made many fools out of "bottom timers", people who think they know the exact right time to buy stocks. The end result for these people is that they miss the most important part of the rebound (see mistake number 5).
In the end, I think it's good that our club has a mix of opinions on any subject, and this is no different. The important thing is to ready ourselves should we want to act, and I think we can all agree on that.
We know there is tremendous value out there in the stock market, and we're excited to start investing with our club's accumulating funds. A number of logistical hurdles still need to be cleared before our club is ready to actually invest in stocks. Some of these hurdles include finalizing the General Partnership, beginning an account with an online brokerage, and perhaps even getting the club accounting software lined up and ready to go.
Some of us are getting restless, viewing this as the best time to buy.
Others of us see no need to rush.
With the recent giant day of layoffs, analysts are getting more and more sour on the 6 and 12 month outlook for the US economy. It can be hard not to when it seems like every other day you know someone who has lost their job. If this is true, there should be great value in stocks in the next 6 months to a year (at the least), and there's no need to rush in quite yet.
On the other hand, the stock market has made many fools out of "bottom timers", people who think they know the exact right time to buy stocks. The end result for these people is that they miss the most important part of the rebound (see mistake number 5).
In the end, I think it's good that our club has a mix of opinions on any subject, and this is no different. The important thing is to ready ourselves should we want to act, and I think we can all agree on that.
Thursday, December 11, 2008
Important additions to the site
Since starting this site about a week ago, our investment club has had some interesting goings on that we hopefully plan to turn into blog posts. We hope to include a smatteing of our goings on, while starting some interesting features that are common occurrences. The plan is to get a sector analysis going, along with detailed analysis of stocks we are considering, our watch list, our holdings, and finally tips to help start up and run an investment club. If you have any suggestions, feel free to post them in the comments section. Thanks!!!
Thursday, December 4, 2008
Our backgrounds
All of us have engineering degrees of various disciplines. Everyone except myself came into this with minimal experience investing, mainly in the 401k and IRAs, and had read books and various articles on the subject. I was actually a financial advisor for 4 years before my current job, had my Series 7, but did nothing with individual stock investing, focusing solely on mutual funds and a wrap account. So while I may have been able to sell stocks, I never did, and never learned the fundamentals of individual stock selection. Hopefully the rest of the club members will give their backgrounds at some point.
Why start an investment club?
The impetus for starting an investment club came in October 2008. The market was down about 30% at the time (who knew it would drop even lower) and several of us started talking more about the market and the economy in general. The idea was floated out there to start an investment club, so we looked online for some tips on starting a club, and held an initial meeting to see if it was feasible to make this happen.
Everything I have read stressed the importance of having an initial meeting to find out everyone's background, interests, and financial goals. If everyone is not on the same page, it can lead to issues down the line. People who are best friends can end up acting crazy when it comes to money. 6 people were invited to join initially, and 4 of us were able to make the time and effort commitment that would be needed to start up a club.
This leads to why we actually started the club. It turned out that all of us was really learning about investing so that we did not have to rely on someone else for advice, and are smart enough to make decisions on our own. Since we all have engineering degrees, we figured our math and analytical backgrounds would be a big benefit to us and help temper much of the emotion that so often causes people's portfolio to rise like a balloon, only to be popped and then plunge into the depths of hell (which is what is happening to many unfortunate people right now). Only time will tell if this works out, or is a complete disaster, but in the end it should be a good learning experience.
This is not to say everyone should have the same reasons for starting a club. We want to beat the market because we are cocky and think we are smart, but others might want to start a club to understand the basics of investing so as to not get swindled by someone, while others might only want a place to bounce stock ideas off other people. Whatever the reasons, if you can find other like-minded people, starting a club will probably be a good use of time.
Everything I have read stressed the importance of having an initial meeting to find out everyone's background, interests, and financial goals. If everyone is not on the same page, it can lead to issues down the line. People who are best friends can end up acting crazy when it comes to money. 6 people were invited to join initially, and 4 of us were able to make the time and effort commitment that would be needed to start up a club.
This leads to why we actually started the club. It turned out that all of us was really learning about investing so that we did not have to rely on someone else for advice, and are smart enough to make decisions on our own. Since we all have engineering degrees, we figured our math and analytical backgrounds would be a big benefit to us and help temper much of the emotion that so often causes people's portfolio to rise like a balloon, only to be popped and then plunge into the depths of hell (which is what is happening to many unfortunate people right now). Only time will tell if this works out, or is a complete disaster, but in the end it should be a good learning experience.
This is not to say everyone should have the same reasons for starting a club. We want to beat the market because we are cocky and think we are smart, but others might want to start a club to understand the basics of investing so as to not get swindled by someone, while others might only want a place to bounce stock ideas off other people. Whatever the reasons, if you can find other like-minded people, starting a club will probably be a good use of time.
Welcome
The goal of this blog is to detail the trials and tribulations of 4 twenty-something engineers starting up an investment club during probably the worst market conditions we will even see in our lifetime. We want to get into the specifics of how we started the club, how we run our meetings, how we pick our stocks, while showcasing what we did right, what we did wrong, and everything in between.
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