- The Washington Times - Tuesday, September 24, 2002

You better have a cool head if you're going to join the Dwyer Investment Club. The threat of war in Iraq, recent corporate-accounting scandals and the weak economy have left the stock market battered and bruised. None of it fazes the members of the Dwyer Investment Club, a group of 10 Washington-area residents who pool their money to invest on Wall Street.
"We have been around awhile. We haven't sold anything in panic," said Don Lucas, an Arlington resident who helped form the club in 1985.
A sense of patience pervades older investment clubs like the Dwyer group, according to Kenneth S. Janke Sr., chairman of the National Association of Investors Corp., a Michigan group that advises investment clubs.
"Many investment clubs are comprised of seasoned investors, and they don't become nervous very easily. There is a sense of stability within many of these groups," Mr. Janke said.
Some investment clubs have apparently disbanded since the market began declining.
The clubs hit their peak of popularity in 1999, when nationwide membership in the association numbered 37,129 clubs. According to its Web site, the association has an enrollment of 30,278 clubs today.
The drop in club membership follows a decade of phenomenal growth. In 1990, there were 7,085 investment clubs in the nation.
The success of the Beardstown Business and Professional Women's Investment Club better known as simply the Beardstown Ladies drove the boom in investment clubs in the past decade. The group, made up of women 70 and older, wrote a best-selling book about the success of its investments, sparking a boom in investors who tried to emulate the Beardstown Ladies' success. Their success was subsequently debunked.
Most of the clubs follow the same model: They tend to have an initial investment fee of several hundred dollars, as well as a monthly fee of about $30. Some groups trade online, although many use a traditional broker.
The clubs rarely cash out on their gains, choosing instead to reinvest them and increase their portfolio and net worth. The National Association of Investors Corp. encourages its member clubs to put their money in older, reliable companies.
It is not clear why the number of clubs in the nation has declined in recent years, Mr. Janke said.
"From what we are hearing, it is the newer investment clubs that are going out of business, not the more established ones. [The seasoned clubs] seem to be better at taking the market volatility in stride," he said.
The association could not provide figures on the amount of money investment clubs have lost since the stock market began declining.
The association does compile the Better Investing Top 100 index, which is made up of the companies most widely held by NAIC investment clubs. Since its inception in 1986, the index has an annualized price appreciation of 12.5 percent vs. 10.9 percent for the Standard & Poor's 500.
Members of local investment clubs say they have not changed their investment strategies, despite the market downturn.
The clubs are still investing primarily in stocks, although they have shied away from risky technology stocks.
Research and Investment Club Holdings (RICH), an all-women's club in the Washington area, had a net worth of roughly $12,000 when it was founded in 1997.
It has about $20,000 in the portfolio today, although the rate of return has declined from about 80 percent at its peak in spring 2000 to about 6 percent today.
Still, no one in the club has panicked, said Jenny Ramarui, one of its members.
"I look at it like going to dinner. I only pay $30 a month to be a member. That's about the price of what it costs to go out to dinner on the weekend," she said.
Ms. Ramarui said the RICH members learned their lesson a few years ago when they jettisoned some underperforming stocks including Baltimore educational-support company Sylvan Learning Systems Inc. and Waste Management Inc., a Houston-based trash company only to see them recover later.
In recent months, RICH has held onto its investments in the Cheesecake Factory Inc., Bed Bath & Beyond Inc. and Home Depot Inc., even though shares in all three have fallen in value in the last year.
Most seasoned investors know the trick to playing Wall Street is patience, said Lorna Daniels, a member of Hui Five, a Northern Virginia club for Asian-American women.
"Here's the idea: You don't lose unless you sell. You have to remember, the losses are only on paper," Ms. Daniels said.

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