Investment clubbers...do you belong to NAIC? What are the pros and cons of belonging?

Question

Is it worth the cost of joining?

Answer 1

13 years and counting

the pros
when we started, most of us were neophytes; reading the monthly mag, doing our homework for stock selections, reading the financials....it helped us learn about investing

another pro...with a group of people, each brings their own area of expertise and interest; one of us likes the banking sector, another is interested in biotech...etc.etc etc..

a club also provides a level of camaraderie, friendly support during the [sometimes painful] learning curve experiences; a club also can maintain the interest and enthusiasm for investing that may fade in an individual

also, by being registered with NAIC; having a FID for state and federal taxes, it gives credibility for tax loses...


the cons
if someone is a veteran investor, he/she may try to dictate/monopolize the conversations about investing
you need a good mix of people/personalities

if your club doesn't have a lot of capital , it can be very boring...not enough $$$$ to buy anything...no reason to have a meeting...likewise, if you are buying something at each meeting and do not have a cash balance sufficient to grab that "next great thing"...

"convenient" meeting times, boredom with meetings, apathy, lagging interest are very common..

group mix can be a killer, if you follow the NAIC charter guidelines, they recommend a consensus vote for any action
if you have diametrically opposed members in the group...conservative vs speculative..
often, nothing will get done...




overall, our group has held up fairly well...we have had 3 members quit, but 4 have joined...
the first couple of years we were learning...painfully
now, we have a better understanding of trying to make $$$$$


the one serious caveat about NAIC

their focus is on fundamentally good stocks that should double in 5-7 years....basically a buy and hold pattern until then...
we have found that using a deep discount brokerage allows us to trade as often as we like ; large fees/commissions are a profit killer
also, you need a fairly large amount of monthly $$$ to keep investing...without selling off something..
the buy and hold pattern started when commissions were extremely high and the stocks were paying a good dividend-that pattern is not valid anymore...
you can trade in and out cheaply for a good profit
there are ETFs and close-ended mutual funds that you can buy like stocks that are paying double digit dividends....

so....overall, it has been a good learning experience
but I would recommend using a more aggressive stock selection for some of your choices...our club limits spec stocks to 10% of our holdings, with a 40% gain [ in a year]

also, if you do form a club
be advised that some of the officers will receive a lot of financial junk mail....