BI > MAY 2006

World Trade Center Investment Club Continues

Real-life Stories From Clubs and Individuals

Ten years ago, 14 women working for the Port Authority of New York and New Jersey, the owner of the World Trade Center, organized an investment club. At the first meeting members decided the primary purpose of the club would be education. At that same meeting, after a significant amount of discussion, the group selected its name -- Women's Investment and Therapy Society -- WITS for short. The members brought a diversity of backgrounds to the club -- legal, finance, real estate, administration and transportation professionals were all well-represented. Organizing the club seemed to occur quickly. The attorney created the partnership, the administrators set up the bylaws, finance members organized training and everyone read the book by the Beardstown Ladies.

Women's Investment and Therapy Society. Pictured are, front row, left to right: Deb McGinn, Sandra Van de Walle, Katy MacKay and Charlotte Frank. Back row: Connie Bauman, Laura Radin, Karen Matthews, Marie Steiner, Cynthia Horvath, Maria Malone-Hodges, Kristina Stillman, Cherrie Nanninga, Kate Morrison and Mary Templeton.

Club membership is maintained at 20 or less, and all members are expected to participate in meetings. Members contribute $100 per month to purchase stocks and occasionally contribute an additional amount for club administration -- to cover dues in BetterInvesting and software upgrades, for example. The club adopted a template to evaluate stocks that was modeled on the template of the Beardstown Ladies, but we modified it to reflect the risk-return objectives of the group. During the 10 years the template has changed slightly in ways members thought might be helpful in evaluating stocks. Early in its operation, the club adopted one simple rule that exists to this day -- "no tacky stocks." There's no specific definition of a tacky stock, but all the members know one when they see one. No other rules have been so permanent, and the investment philosophy and guidelines have been changed from time to time. After a few years of studying stocks that seemed to be good additions for the portfolio, the club introduced diversification targets. The original diversification targets were only by sector, but later diversification by company size was added as well.

Like many other clubs, one of the biggest challenges is deciding when to sell a stock. We're forever hopeful our losers will come back and our winners will keep climbing. The club has tried various objective tools throughout the years to help balance the emotional tugs that occur when it's time to think about selling. Currently we're using a method of establishing 'trigger prices.' For each stock we have two trigger prices -- 25 percent below the purchase price and 50 percent above. What's triggered when a stock hits either trigger price is a review by the club member who's monitoring the stock, not an automatic sale. In several cases a steep drop in stock price has resulted in the club's increasing its position in the stock, but only after our review of the reasons for the drop identified a buying opportunity. The triggers just make us sit up and take notice in a more formal way. We wouldn't want to leave anyone with the impression WITS has stripped all emotion out of our buy-sell decisions. For example, when a member recommended selling Tiffany & Co., one of our earliest stocks and one that had had a very good run, the club debated for almost the entire meeting on an almost purely emotional level -- we loved the idea of owning Tiffany.

Through it all, we've remained true to our mandate of education. Over the years the membership of the club has changed a bit. A few original members resigned from the club, and some new members have joined. Still, most WITS members are either employees or alumnae of the Port Authority of New York and New Jersey, and up until Sept. 11 the club held its monthly meetings on the 88th floor of the Trade Center. Many of our club members were at work in the World Trade Center both on Sept. 11 and in February 1993 when the building was originally attacked by terrorists. On the evening of the first regularly scheduled club meeting after Sept. 11, there was a memorial service for the many Port Authority colleagues who lost their lives in the attack. Club members attended the memorial service and afterward came together at the home of a WITS member to celebrate that all members had survived the tragedy. Granted, the celebration was bittersweet because so many innocent people had perished, but the tragedy made us keenly aware how fortunate we were to be intact and how important the friendships in our group were to each of us.

by members of WITS Investment Club