By Chris Cochran
I’m definitely a creature of habit, and I appreciate routine when it’s to my benefit. In another of those “boy, time flies” moments recently, I was thinking about some of the consistent things in my life and realized one of the most consistent things has been my active participation in a traditional, community-based investment club for the past 16 years. I thought I’d been in it for maybe five to 10 years – but the math said no, 16 years. The club has existed for almost 30 years, and a couple of the original members are still there – others come and go depending on personal and financial needs.
That longevity demonstrates the club’s achievements and successes – if it was failing, members wouldn’t stick around. I like it because it’s an opportunity to learn and participate in small-scale investing – kind of like playing on a community flag football team instead of the NFL. You can benefit from members’ experience and knowledge and share your own. The risk threshold is low because it’s meant to be a learning experience – one that doesn’t require (or allow) huge investments. No one is going to lose their shirt or make a killing in the market.
Investment clubs like this may seem anachronistic today, or at best, quaint. Through paid subscriptions to relevant investment resources like Morningstar.com or Bloomberg, or utilizing investment research via public library databases (most medium to large public libraries provide some kind of investment research access like Morningstar, ValueLine, and Wall Street Journal), individuals have easy access to stock analysis, trends, and market data that can inform their investment decisions. But I also like the shared experience of the club – we all have everyone’s best interest in mind.
My club got its start in Washington D.C., and for years – prior to Covid – the social component was just as important. Members would rotate hosting duties which included providing dinner. Starting a meeting with a shared meal gives everyone a chance to unwind from the day, catch up on personal and professional news, and just relax.
When Covid hit we started virtual meetings, allowing us to continue the partnership (we’re a limited partnership, S corporation). It also expanded opportunities for recruiting new members and retaining existing ones. Several members moved out of the D.C. area during Covid, but with our new virtual meetings, we decided we could continue to meet our social, educational, and financial goals.
Members now live on both U.S. coasts. The virtual environment accommodates our dispersed geographies and even makes it easy for members who are traveling to join our Zoom from wherever they happen to be on meeting day.
Aside from the financial literacy, stock market education, and social aspects, I’ve found a lot of benefits from being a club member that apply to operating my business and working collaboratively with individuals and teams in other activities.
Seven Business Lessons I Learned from My Investment Club
- Patience pays off – I’m happy to say that my club’s portfolio value over the years has doubled versus what we’ve invested. That’s a pretty good rate of return. Being informed and sharing our collective knowledge with an eye to the long-term has proved successful – benefits that can be applied to running a small business.
- Research matters – I’m no stock market guru, but you can’t rely much on gut feeling or even instinct when it comes to investing (maybe a little bit, but good luck with that!). Tracking individual securities and reporting on them at meetings fosters accountability and contributes to my ongoing business education. As a research librarian, I’m very keen on these continued learning opportunitiess for my business and my club membership.
- Collaboration strengthens confidence – It’s a great feeling to share the success of our investment decisions with each other. And since many of us have a personal investment portfolio outside the club, our success gives us confidence to make decisions about those portfolios. I get this same confidence boost from colleagues in professional groups like the Association of Independent Information Professionals (AIIP), where I can connect with other solopreneurs to learn how they’re running their business and retaining clients.
- Shared learning deepens understanding – Each member contributes to the group’s success. I always learn something new and get new insights on the markets.
- You can lead without being an expert – This sounds counter-intuitive but given that members come from a wide variety of professional backgrounds – private sector, nonprofit, government, arts, international and domestic – we can build on each other’s experience. Leadership has many components.
- Being informed beats being lucky – Luck can come into play once in a while, but nothing beats being informed, especially when you’re dealing with the stock market.
- The power of consistency – We always tell prospective members that our club is not a place to come in, bank some money, and look for large short-term returns before exiting. The power IS in the consistency – individual education, learning from others, sharing discovered insights. Those things help us individually with our personal investment decisions as well.
Are you in an investment club? What have you learned that can be applied to your business or career? Share in the comments section.
An Inquiring Mind 