Local investment clubs still speculatin’
SUMMIT COUNTY – Summit County might be 1,700 miles from New York City, but that isn’t too far for the many residents here keeping an eye on Wall Street.
Local investment clubs are taking the mystery out of price-earnings ratios, dividends and large-cap market funds. And despite a bearish market, the investment club members are hanging in there, learning how to play the game.
Tom Koch of Breckenridge started the Double Black Diamond Investment Club with some friends in 1996. Koch, owner of Summit Printing, an Internet consultant with Peak 8 Networks and a local Boy Scouts leader, said he had several friends and clients who didn’t do much investing outside their own businesses. “We looked at it as an opportunity to diversify,” Koch said.
The club has grown to 17 members, including six who have been with the club since its inception. The club members do their own research and seek out the advice of experts. Club members range in age from 22 to 57.
Although the club has an unrealized loss this year, Koch said the pooled investors actually made money last year, despite a meager performance of larger market indexes.
“We’re looking for bargains – stuff that’s been beaten up by the market, but companies that are doing well,” Koch said. “We don’t sell as much as we probably should, but that’s what we learn. The idea is to look at different stocks, be aware of what’s going on in the economy and say, “How do we make a buck here?’ The idea is to make money, period.”
Koch said the advantage of the club over personal investing is purchasing power. The members chip in $100 a month, with which the club invests in stocks, index funds and other securities. With their collective contributions, the club members can buy more without exposing themselves to great risk. The club also uses a Fort Collins-based money manager to make trades and provide new investment strategies.
“If you can turn around and take what you’ve learned in the club and apply it to your own portfolio, it’s a less expensive way to learn,” Koch said.
The investing bug caught on in the Koch family. Tom’s wife, Kathy, is a member of the Gold Dredge Investment Club. The all-women’s club comprises 13 members and has been investing for 13 years. Kathy Koch said interest in the investing club has waned with the stock market decline. The group’s portfolio, which once rose into the $150,000 range, has declined to less than half that.
“I was kind of surprised to learn that it’s incredibly volatile,” Kathy Koch said, adding she’s still enjoying investing. “The biggest eye-opener was how hugely the prices fluctuate.”
Kathy Koch said she initially joined the club to learn – to help her figure out whether she needed to use a stock broker and break down the complex vocabulary of investing.
The club initially used a broker, she said. Now, the group makes all its trades online. Each member commits $40 a month to the pool.
She said the club members have taught her a lot, and she’s made investment moves she probably wouldn’t have made on her own.
“I’ve made a lot of new friends and everybody comes to the group with a different strength,” Kathy Koch said. “I imagine I would have been more conservative on my own. But you get people bouncing different ideas and opinions around and it opens your mind a little.”
Another group, the Summit Prospectors Investment Club, completely divested its portfolio at the end of last year. Member Ev Thomas said the poor performance of stocks was taking its toll on the group, which has now focused solely on learning about investing.
Thomas said the group still tracks stocks but more in an educational sense. Club members set up their own pseudo-portfolios with an imagined $20,000. The members track their performance using the closing price of stocks each day, and awards are given out for the best speculators. The group also still invites guest speakers to share investing expertise.
“Our emphasis is how to search for the best buy,” Thomas said. “We want to find a good company at a good price.”
Reid Williams can be reached at (970) 668-3998, ext. 237, or firstname.lastname@example.org.
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