Investment club reflects on economic crisis

(NECN: Peter Howe, Yarmouth, Mass.) – For 23 years, a group of businesswomen has been meeting weekly to pick stocks as part of the Investments Unlimited of Cape Cod investing club. Coming out of a very long, very hard year, they’ve learned a lot of hard lessons, bounced back from the worst of last year’s sell off — and kept the faith. “We’ve told our members: This is the time. Good stocks are on sale,” says Debbie Lavoie, a Barnstable town employee who is one of the 15 members of the club, one of tens of thousands of investment clubs that have been set up across America for members to make money and gain experience and insights for managing their own personal investments. Like millions of investors throughout the world, the women of Investments Unlimited have painful memories of this time last year, when the collapse of Lehman Brothers and American International Group turned a gathering economic crisis into a six-month disaster for the stock market, which fell by nearly half between early September 2008 and March 2009. Club president Marilyn Stagg, who helps run a family Chevrolet dealership in Harwich and is club president, said the group began taking profits and positioning itself more defensively back when the Dow Jones Industrial Average touched 14,000 in October 2007 and indications abounded the sub-prime mortgage market was headed for trouble. But, she says, “We never anticipated what happened in 2008. I mean, we were preparing for something. But we were devastated by what was going on in the market.” Like many stock clubs, this one is run like a mini-mutual-fund. The 15-woman group invests about $200,000 total, collecting minimum dues of $65 a month per member, but members can invest more if they want. Still, all 15 have an equal vote on what equities they buy and sell. Stagg says the group’s investment units were worth about $24 each at the peak of the market in 2007, and by the time the sell off ran its course in 2008, got down as low as $9. Their fund dropped as much as 53 percent after the market sell off, but has since recovered to be down about 36 percent. But in all those months of market gyrations, no one cashed out, no one quit, and several, sensing opportunity, invested extra. Stagg admits, “We needed pep talks” at times last fall to stick with the market. “But we would try to come to the meetings and go, ‘All right, girls: We’re shopping. What do we want to buy?’ This is the time we waited for. We’ve talked about this many times. We wait for catastrophes. As the market has sprung back from Dow 6500 in March, steadily reinvesting in the market has made them some money and helped recoup about one third of the last year’s losses. Besides big blue-chips like Procter & Gamble, General Electric and Microsoft, stocks they’re invested now include retailers Coldwater Creek, Chico’s, 1800PetMeds.com, oil-production technology giant Schlumberger. Stocks they have on a “watch list,” waiting for a good price to buy, include lighting supplier Cree, the Family Dollar stores chain, Nike, Visa, and Wells Fargo. They say they have learned some hard lessons this last year, like, the importance of dividend-paying stocks in a portfolio. Also the need to diversify, but not too much. They’ve cut their list of stocks to 19 from 26. “We’re trying to keep bigger positions in less stock. Sometimes we can get too excited and be out there too much. We had to bring ourselves in and get focused, especially in this market. Stagg likes to quote Warren Buffett that “the greatest asset an investor has is patience. We try to wait for some of our big companies to get creamed,” she says, laughing, “so we can try to buy them … We’ve learned to try to time the market and try to take advantage of downturns and try to buy low and dollar-cost average. Many times it works out, many times it doesn’t.” After several experiences of watching stocks they own go up — but then watching them come all the way back down — Lavoie says they’ve learned it is important to avoid being too slow to sell, to go ahead and take profits. “We try to keep the blue chips, but then we do have ones that we consider just fun stocks, speculative, — let’s buy it, see where it goes, make some money on it, and then get rid of it,” Lavoie says. Through it all, members of the club — which isn’t taking new members and already has a waiting list for people waiting for a seat to open up — say they especially appreciate how much they have been able to learn about investing, with fellow members who grow to become true friends. Besides what they invest through the Investments Unlimited pool, all also manage their own personal investments and 401(k)’s and retirement accounts and other assets. “You have to make some kind of commitment to the club,” Lavoie says. “It’s not something that you’re going to jump in, make $100,000, and leave. It’s more educational. It’s fun. But we’re hoping this is women helping women. A lot of people, before they joined the club, didn’t even know what the market is, didn’t know how to buy a stock, didn’t know how to sell a stock, when, what to look at, sectors, high, low, downturn, upturn, all of it.” As a group the women say they’re still definitely feeling the aftershocks of this cataclysmic year in the market, but are feeling grateful for some hard-learned lessons and market experience. And now, guardedly optimistic. “Hopefully, we’re on that turn” back up, Lavoie says. “It’s been a year. We’ve watched them go down. Now let’s get in, buy, and watch them go back up again. We’re encouraged.” For everyone who has money in the market — here’s hoping the ladies of Investments Unlimited of Cape Cod are on to something.