Wasik - The Investment Club Book

By joining or forming investment clubs, anyone from any background can become a shrewd stock market investor. From picking the right companies to managing your trading costs, this book gives you all the information including a complete glossary and resource list you need to start investing.

LEARN

• Why more than 60 percent of investment clubs regularly beat the performance of the Standard & Poors 500 index
• How your club should choose a broker and get your moneys worth from commissions
• How clubs are organized and run for maximum return on the dollar
• How clubs decide to buy stocks and when to sell them
• How to analyze companies to see the growth and profit potential no matter what the stock market is doing
• How to diversify your clubs portfolio and reinvest dividends
• The Five Habits of Highly Effective Investment Clubs for long-term stability and success.

A useful guide for taking charge of your financial life. John Wasik has written a book full of practical information for anyone interested in starting or joining an investment club.

Joseph Anthony, financial writer, author of
Working for Yourself: Full Time, Part Time, Anytime

An Alternate Selection of The Literary Guild and a Featured Alternate Selection of Doubleday Book Club

What a great book! It is time that the individual be shown how to truly safeguard their future and invest with intelligence. This book does exactly that. If you want to secure your retirement, read this book.

Suze Orman, CFP, author of
Youve Earned It, Dont Lose It!

If you invest on a shoestring, then this is the book for you. No more feeling left behind by all those wealthy Wall Street aristocrats. John Wasik uncovers some of the hottest secrets to investing and teaches you how to become your own tycoon.

Christy Heady, syndicated and financial journalist,
author of The Complete Guide to
Making Money on Wall Street

Copyright 1995 by John F. Wasik

All rights reserved.

Warner Books, Inc.

Hachette Book Group

237 Park Avenue

New York, NY 10017

Visit our website at www.HachetteBookGroup.com

First eBook Edition: September 2009

ISBN: 978-0-446-56504-2

TO KATHLEEN,

WHOSE PATIENCE AND LOVE

COMPOUND OVER TIME.

Thanks to all of the wonderful people of the NAIC, especially Tom OHara, Ken Janke, Martha Moore, and Ralph Seger. And, of course, to investment clubbers everywhere.

All materials obtained from the National Association of Investors Corporation are used with permission.

Charts used with permission from Ibbotson Associates, Chicago, from Stocks, Bonds, Bills and Inflation 1994 Yearbook (annual updates by Roger Ibbotson and Rex A. Sinquefield). All rights reserved.

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that neither the publisher nor the author is engaged in rendering legal, investment, or other professional services. If legal or investment advice (or other expert assistance) is required, the services of a competent professional should be sought.

Figures used throughout the book, in various charts and throughout the text, are for illustrative purposes only. Readers should consult with appropriate sources for precise figures when computing analyses.

I n the thirty-five years that I have been involved in investing, perhaps a thousand books on the subject have found their way to my desk, ranging from cattle futures to the potential downfall of the American economy. Most have centered on how to invest in myriad financial instruments with chapter headings that can almost be predicted without going beyond the cover. They have contained all kinds of different theories and formulas to make the investor more successful. What I have discovered, however, is that successful investing comes from common sense. Investing is not mysterious. John Wasik has been able to capture that common sense from people who invest, using time-tested principles that may appear simple on the surface but when followed produce superior results. Instead of only a how to book, he offers a how they did it book, where the reader has an opportunity to learn firsthand how different people made their investment decisions. He has added the human factor.

It has long been my contention that an individual can take every investment course that is offered through adult education and various brokerage firms and still not know how to invest. That experience comes only when the individual puts money at risk, whether its a large sum or $30 each month. In surveys taken by NAIC over the years, we have consistently found that in a newly formed investment club of fifteen members, only one or two have ever invested before the club was organized. After five years, the figures are completely reversed. All of the members, except for one or two, are not only continuing in their club, but are investing on their own, building individual portfolios and investing three times as much as in their club. Investment clubs serve as an introduction to the stock market. By investing on their own, they are able to build sizable nest eggs for retirement or other needs. But the investment club account itself can turn into a bonanza if its a lifetime project.

In the Mutual Investment Club of Detroit, which was founded in 1940, one of the original members began by investing $10 each month and then increased that amount to $20. Upon retirement, he withdrew $70,000 to pay off his mortgage and become debt free. Even though he is retired, he continues to invest and participate in the club activities. Through the years his out-of-pocket investment has been less than $10,000, yet his total worth in the investment club is now $570,000. His experience has served as an example for the younger members who have joined the investment club in recent years.

At times the professional investment community, with some notable exceptions, has passed off investment club members as amateurs who get lucky now and then. Yet those professionals have been unable to argue with the clubs success. On these pages you will be able to meet real people who make real decisions. Thats important, because theres more to investing than simply trying to use some formula.

John has visited with clubs, attending their meetings as well as the investor fairs and other seminars that are held for the benefit of club members and individual investors. He has invested himself and is even part of a family investment club. The result is that John has been able to impart real-life investing experiences in this book. From all of this, he has learned why some are successful while others fail, and that information is passed along to the reader in a manner that makes it not only interesting, but informative. If you belong to an investment club, you will easily be able to relate to various incidents. If you dont belong, it probably wont be very long before you organize one of your own. I hope so. Its a wonderful experience.

Kenneth S. Janke
President and CEO
NAIC (National Association of Investors Corporation)

T his book is about hundreds of thousands of people who werent born with money, didnt invent anything, didnt build a successful business, didnt win the lottery. They started out with as little as $10 a month and built it into sizable sums using some simple yet elegant rules. Profitable stock investing as perfected by thousands of investment clubs throughout the world is hardly a fluke. This movement has created at least one hundred millionaires and countless thousands who are able to retire in comfort, buy second homes, and send their children to college. Ive talked to clubs from coast to coast, attended investment fairs and seminars, and visited the headquarters of organized investment clubs in an effort to distill some of their methods. There is no one secret to winning big, but a handful of strategies is enough to guide you along the path to a kind of successful investing rarely seen on Wall Street.