Many of our clients are members of investment clubs and from time to time reach out to us to research a particular stock being discussed in the club. We are always happy to help.
There are several things to keep in mind when considering joining an investment club:
- Your goal for joining the club should be primarily friendship and networking.
- Investment clubs originally had appeal as a way for smaller investors to get together and pool their funds to make larger investments than they would otherwise have been able to make. The club also provided a means for small investors to build more diversified portfolios than could otherwise have been achieved on a stand-alone basis.
- Most investment clubs underperform broad equity index funds. You shouldn’t be bothered by this, because most professional active money managers also underperform broad equity index funds.
- People are becoming increasingly aware of the underperformance of investment clubs. A Wall Street Journal article called Fun Fades at Investing Clubs reported that membership in clubs fell to 39,000 in 2012 down from 400,000 in 1998.
- Argos is here to help you with any research material you may want on any stock picks. We have access to research from various Wall Street firms including Goldman Sachs, Merrill Lynch, CSFB and others.
The bottom line is the purpose of the investment club isn’t to beat the market but to have a good time and network with your friends. By keeping that goal in mind, you will be focused on the right factors in determining if your club will be successful for you.