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Cover Story : Taking Charge : Investment Clubs Are Growing As More Valley Residents Join Forces To Take Personal Responsibility For Their Financial Future.

August 26, 1994|PATRICIA WARD BIEDERMAN | TIMES STAFF WRITER

It's a ritual for Roz Rosin.

As soon as the Encino woman gets the paper in the morning, she turns to the stock tables.

Five years ago, Rosin thought of Blockbuster, if she thought of it at all, as a place where she could rent videos. Today she and a group of her friends own shares in the company.

Like a growing number of Valley residents, Rosin belongs to an investment club. Once a month, she meets with 10 of her friends and spends a couple of hours arguing the pros and cons of buying Cifra or some other growth stock. Not a great deal of money hangs in the balance--$50 per person per month. But the debate is as serious as if millions were riding on the women's ability to pick stock-market winners.

The Magnolia Investment Group, as the women call themselves, includes an attorney, a real-estate agent and several teachers like Rosin. Most are married and have teen-age children. "I really like the idea of a bunch of women getting together to do something serious," says member Terry Snyder, who lives in Encino and practices law in Sherman Oaks. Since Rosin started the club in 1992, the women have put together a portfolio of seven stocks, worth about $11,000 (recent purchases include Marvel, the comics company). The group also has about $2,000 in cash.

Because of the club, Rosin has become something she never expected to be--a confident investor, proud of her ability to parlay the money she earns as a substitute teacher into a growing nest egg. "It's given me the courage to invest on my own," says Rosin. But the club has had other surprising benefits as well. Now when she goes to a party with her attorney husband, Rich, she often finds herself talking with his friends about the vagaries of the stock market. "I have a lot of self-confidence now that I didn't have before." Best of all, Rosin says, teen-age son, Kenny, and college-age daughter, Melissa, treat her with greater respect since she became the family expert on such weighty matters as whether to buy, sell or hold Telefonica de Argentina.

Since Rosin got serious about stocks, she has been known to spend hours in the library, poring over price-earnings ratios and other data reported and evaluated in the investors' bible, Value Line. She clips news stories about companies she's following and keeps them in a loose-leaf binder dedicated to stocks that have piqued her interest. "There's a gambling, fun part of me that loves the stock market," she admits.

Indeed Rosin says she only recently realized how profoundly the investment club had affected her. The occasion was a trip the group took to South Coast Plaza for a day of power shopping. In the course of their outing, Rosin spotted a gorgeous St. John suit that she tried on to the oohs and aahs of her fellow investors. The black knit suit was luscious, she recalls, but she decided to pass on it. "It was $800 with tax. And I thought, 'I'm going to buy McDonald's!' "

Like many others locally, Rosin's club is a member of the National Assn. of Investors Corp., a nonprofit organization based in Michigan that has been encouraging and educating groups of small investors since 1951. According to the NAIC, there are some 25,000 investment clubs in the United States, 12,000 of them members of the organization. NAIC clubs have slightly more women members than men, and, for reasons that have yet to be plumbed, all-female clubs tend to outperform all-male or mixed-gender ones (1993 was the exception, with men's clubs edging the women out). The average NAIC group has 17 members who invest an average of $37.23 a month. It holds 12 different stocks and saw its portfolio gain 13.9% last year, significantly better than the S & P 500's gain of just over 10%. Currently, the top five holdings of NAIC clubs are Aflac (an insurance company), McDonald's, AT & T, Wal-Mart Stores and PepsiCo.

Last year more than 2,000 new clubs started up under NAIC auspices. Clubs have been increasing by 10% to 12% a year. Indeed, the proliferation of investment clubs seems to be part of a larger trend, as more and more people take personal responsibility for their fiscal health, just as they have for their physical health. There's abundant evidence that financial planning is being democratized and demystified--look at the proliferation of magazines devoted to money management and the boom in mutual funds, which individuals can buy without a broker. But this is a relatively recent phenomenon. Decades ago, before IRAs and 401(k) plans appeared and encouraged modest earners to begin making investment decisions, picking stocks was largely the purview of the wealthy, or their stockbrokers. "This was perceived as a rich, white, male-dominated endeavor," observes Barry Murphy, director of marketing for NAIC. If working people invested at all, they tended to eschew the market and put their money into super-safe United States savings bonds.

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