BI > SEPTEMBER 1999

Mother, May I Have My Computer Back?

Long-Term Investing's Computer Dimension

In our electronic age, the blending of computers with NAIC's BetterInvesting investment principles and stock study procedures is opening the doors to common stock investing for more Americans than ever before. By making investing more fun, more accurate, more enabling and less time consuming, computers are adding a new dimension to long-term investing, helping clubs and individuals everywhere to build wealth over their lifetime.

Great Expectations Investment Club members shown: (back row, left to right) Dorothy Knight, Pat Bundschuh, Connie McVey, Anne Miller, Jane Nelson and Evelyn Morales. Seated: Wyvetta Swartout, Virginia Egan, Nancy Maxon, Alexina Tyo, Mary Young and Rae Goelzer. Not picture: Caralie Johns, Dorathy Rodman and Wanda Stiffler.

Two Years Running

Over the past two years I've been mentoring this club. My mother is a founding member, and I recently had the opportunity to visit with them again. I interviewed 12 of their 16 members. Their story is one that bears repeating, because it may inspire other BetterInvesting members to encourage their parents and children to learn about investing.

An Evolution of Responsibility

My Mom and Dad invested in the stock market through the years. Dad did the research and made recommendations to mom and she intuitively selected which stocks to buy. They did well, but when Dad died in 1996, mom felt overwhelmed with the thought of managing their portfolio by herself. She asked me to do it for her instead. I was hesitant to accept the responsibility without her input, so I made a deal with her. If she would start an investment club, I would mentor them. That way, she and I together would make her portfolio decisions using NAIC principles and tools.

Just by coincidence, Dad's old investment club invited all of their members' wives to a meeting so they could see what the "boys" had been up to. The president of the club asked mom to take over dad's membership after dad's death, but "she felt too intimidated to join an all men's club." Another GEIC member stated during our interview "they didn't think we would understand about stocks."

During that meeting, the club president invited the women to comment on what they had seen. Mom stood up and passionately spoke to all present. She said it was important for women to learn about investing and the stock market before their husbands predeceased them. (75 percent of all wives outlive their husbands.) She spoke of the distress that she experienced, being left behind with a portfolio of stocks without the knowledge or experience to manage it. At the end of her talk, eight of the women present decided they would form their own club! From that initial eight, they recruited eight more and met for their first club meeting in January, 1997. Their husbands had handled all their investments, and none of them had any stock market knowledge. No one had ever been on a computer, much less the Internet. Gradually they began reading and understanding Value Line, doing the Stock Check List by hand, then the SSG by hand, and finally (after I demonstrated doing an SSG on Investor's Toolkit) they bought the software and began doing SSGs with computers.

An Insatiable Quest?

They ferreted out free senior citizen computer courses at the local colleges and senior centers and enrolled in groups, for safety and camaraderie. Some began with Web-TVs that their children had given them, and then moved up to computers. Others inherited old computers from their children or grandchildren. Eventually a number of members decided that it was also time to get on the Internet; they "didn't want to get behind in the amount of information that was available online." Fourteen out of the 16 club members now use computers and have e-mail, and 10 own at least the SSG module of Toolkit.

They assign the non-computerized club members with members who do have a computer to help with the research. One member has tried to convince her husband that she needs Toolkit to analyze stocks, but he doesn't see its value. She now is going to ask for the software for her next birthday gift! They've found that using Toolkit is "much faster and you don't have to worry about all those numbers and math." They also occasionally "get mad at the computer because it's not doing what they want it to do" and they have heated discussions regarding judgment since they can easily adjust the numbers on the computer.

They've set up the club portfolio on Yahoo! and follow it there. All of their meeting notices and minutes are distributed via e-mail. I believe it's just a matter of time before they're all doing computerized investing.

When asked why they joined an investment club, one member stated "I wanted to take more control of my money." Some discovered that their husbands were "buying high and selling low" and figured that they could at least be doing as well. Others found that their husbands had all of their investments in CDs, and they knew they could outperform CD rates! (which they have, by the way!).

Some wanted to know "what on earth their brokers were doing" -- some had given power of attorney to their broker and were not comfortable with that. Others didn't want to be in the same boat that Mom had been in. Others had husbands whom were or are ill and they could see the writing on the wall: they too would soon be managing their investments.

One had an advisor who was charging them a monthly management fee plus transaction fees and she didn't want to continue paying those huge management fees. (She now uses that broker for transactions only for the equities she decides to buy and sell. She bases her decisions on her own research and the club's research.)

Another had taken some investing classes and she wanted to step out on her own to invest in the companies that she had discovered. Another's son was investing their money in options, which she didn't understand and was worried about. They view themselves as long-term investors, even though some of their husbands are short-term traders.

Bridging Generations... Grammy.com

A number of women in the club are now investing for and with their grandchildren. One funds a portfolio for each of her grandchildren when they reach 13 years of age. Prior to their 13th birthday, she e-mails back and forth with each grandchild and helps them to research the companies they're interested in. So far, her grandkids have bought Coke, Disney, Mead Paper (a local company in her grandson's town) and Belden Wire and Cable (because his dad works there). She's also been transferring AT&T stock to them through a DRP program. She's found that "she not only has the regular stuff to talk to her grandkids about, but now they chat about stocks, and the grandkids are calling her Grammy.com!"

Not only are these grandmas talking with their grandkids about stock, but their baby-boom children are now asking them for investment ideas and advice too! "It's opened up a whole new world of communication between us and our children and grandchildren!" One member learned that her grandkids are regularly watching CNBC too! When she calls to chat with her grandchildren early in the morning, she can hear CNBC in the background as they follow their stocks before school!

Click to enlarge.

'Ordinary' Stock Picking

This group of women is not an extraordinary group -- they were homemakers, social workers, teachers, real estate agents and nurses prior to retirement. Many majored in Home Economics in college. "That was the only thing a woman could major in during the 1940s and 1950s -- that and secretarial school." None are math geniuses, engineers, or accountants, but they've discovered, as have many other women's clubs across the country, that working in a group makes it easier and much less intimidating to learn about the stock market. They help and encourage one another and through their joint learning effort, they've become successful stock pickers!

And it's not all hard work and no play. They get together and go out for lunch after every third meeting. There are always lots of goodies, coffee, and chat time before and after each meeting. They've developed lifetime friendships and networks within the club and they've developed a support system to help them, if and when they do have to manage their portfolios on their own. Most no longer feel fearful or intimidated by the stock market or managing money.

Expecting Success

My final question was "What is the greatest benefit you've received in forming and joining the club?" Their answers included: "It's the greatest thing that happened to me -- I would have let my husband handle everything until the day he died." "Now I get to use my brain again, I've developed new friends, and I know what tools there are to use in selecting stocks for our portfolio." "I don't feel like I'm just throwing darts at the dart board to select stocks."

Others said, "I now know what questions to ask my broker when she or he makes suggestions -- I feel like I won't get taken to the cleaners. And my husband doesn't have to worry about what will happen to me financially if he dies before I do. It's taken a huge worry off his shoulders." And, "I've discovered errors in our account statements that even my husband didn't catch." "I convinced my husband to open up a discount brokerage account and we've saved a bunch of money on transaction fees compared to our full service brokerage account." And finally, "Our full service broker only made us $1,000 on our account two years ago. I took over our account and made a lot more than that in the past year."

They've evolved tremendously over the past two years. Like many clubs, they've discovered that the computerized investing tools enhance the experience, and in fact, encourage learning in other areas, too. They've moved from fearfulness and lack of knowledge to sophisticated investors -- and they've made money while doing it! And, over and beyond the fun that I've had in mentoring them, I too have learned a lot. My mother and I now share phone conversations two or three times a week about the stock market and her portfolio. She's taught me the fine art of patience when watching the stocks in my own portfolio. And I've learned that women can be powerful and open to new learning at all ages! Mentoring them has been a lifetime gift to me also. I am extremely proud of my mother and her wonderful club!

Pat McVey-Ritsick served the Denver and San Francisco chapters for a number of years. Pat also served on NAIC's BetterInvesting Computer Group Advisory Board.