Vermont amateurs refuse to get upset Top-rated stock pickers are in for the long haul

September 02, 1998|By Jean Marbella | Jean Marbella,SUN NATIONAL STAFF

As Wall Street gnashes its teeth over the latest swings in the stock market -- yesterday, the Dow Jones industrial average soared 288.36 points, but stay tuned -- the word from Wilmington, Vt., is: Relax. Preferably with a Starbucks coffee while you're upgrading your computer.

This ski resort town is home to the Hot Prospects Investment Club, an amateur stock picking group that was named best in the nation with its enviable return last year -- 45.1 percent.

The 21-member, all-women group -- whose portfolio includes stock of Starbucks, Microsoft, Intel and lesser-known companies -- received the award from the National Association of Investors Corp., an umbrella group for almost 38,000 investment clubs across the country. With combined investments of about $28,000, Hot Prospects' portfolio is worth about $52,000.

"But that was before Monday," club treasurer Laurie Boyd said yesterday with a nervous laugh.

Boyd, however, said that the club hasn't gotten its plum returns by reacting to every jolt in the stock market, even the current stomach-churning ones. In fact, since its members began investing 4 1/2 years ago, they have yet to unload any stocks, even stinkers such as Cendant, whose recently revealed accounting fraud sent its market price plummeting.

"I don't get all bent out of shape," Boyd said. "We're long-term investors. The market can go down a bit and we're still going to be OK. When I looked at our portfolio [Monday] night, I went, 'Whoa, we're only at a 69 percent increase instead of an 89 percent increase.' "

Boyd said the club has had the good fortune of being in the market during a boom time, so it has a cushion allowing it to ride out fluctuations.

Clubs such as Hot Prospects have experienced a surge in popularity in recent years, fueled by a record stock market that everyone wants to join, as well as a huge increase in information about investing available in books, magazines, newsletters and the Internet.

Investment clubs got their biggest boost -- and, later, their biggest notoriety -- from the Beardstown Ladies, a group of grandmotherly women from Illinois who wrote several books about how they picked stocks and made double the Standard & Poor's average. They became media darlings and sold more than one million books, but subsequently were found to have miscalculated their returns -- which actually were far below the market average during boom years. The Ladies' treasurer said it was all an innocent mistake -- a computer error she made when figuring the returns -- and the members remain popular speakers.

The clubs have brought an entire new group of investors into the market. For many of the members, it's their first venture into what once was a mysterious world, thought to be only for the wealthy and the professionally trained. Club membership, unlike the trader's floor at the stock exchange, is heavily female -- 65 percent of the National Association of Investors Corp. members, for example, are women. And they usually have a relatively small amount of money invested in their clubs, an average of $5,418, according to the national group.

The Hot Prospects Investment Club includes a restaurant owner, a Realtor, a paralegal, several shop owners, a few retirees and Wilmington's town treasurer, who is Boyd. They contribute a minimum of $25 a month into a pool that they then invest in the market. Each member is responsible for monitoring a particular company or a certain sector of the economy, and they share the information they've gathered at monthly meetings.

"I really had no clue before this how to pick stocks," said Meg Streeter, the Realtor. "It's been a good lesson in the value of saving even a small bit of money."

Hot Prospects is currently invested in 15 companies, with leanings toward technology companies such as Cisco Systems, as well as companies the women like both for their products and their earnings: Estee Lauder, the make-up giant, and Annie's Homegrown, a small food company.

"They make little boxes of macaroni and cheese," Streeter said, "that we all love."

Pub Date: 9/02/98

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