Stock clubs, once pooh-poohed by '90s bull market investors, feel vindicated as their portfolios grow.
Invest regularly in growth companies. Buy and hold. Reinvest dividends and capital gains. Diversify.
In the boom-boom days of the '90s bull market, many investors chasing double- or even triple-digit gains thought the mantra of the nation's stock clubs was pretty dull.
But with the Nasdaq on the verge of posting its worst year ever, many investment clubs are feeling vindicated by their stodgy, if somewhat maligned, approach.
"We had a lot of people saying, "You're so outdated,' " said Joanne Briggs, who belongs to two investment clubs in Sacramento, Calif. "Well, now they know."
And so what if their clubs' returns are modest compared with those of those few lucky investors who manage to time the rise and fall of the latest hot stocks?
"I'm making money. That's the bottom line," said Briggs, secretary of Sacramento Money Makers, which is up almost 10 percent so far for 2000.
The technology-focused Nasdaq Composite Index so far has skidded nearly 40 percent this year, and the overall market has turned bearish.
Meanwhile, National Association of Investors Corp., the investment clubs' national organization, is bragging that its Top 100 index has most major market indexes beat for 2000. The index, which NAIC boasts has a five-year annualized return of 22.7 percent as of Nov. 30, is made up of the stocks most widely held by clubs, including PepsiCo, Home Depot and Microsoft.
It seems NAIC can't help but gloat a little. Consider this message on the group's Web site: ". . . Aesop was right. You may have to squint to see it, but our tortoise is clearly beaming. . . . NAIC investors identify with our shell-bound colleague, carefully selecting quality companies at attractive prices."
Of course not all investment clubs can gloat about avoiding technology stocks.
"The last couple of months have been kind of rough," said Andy Harshbarger, a social worker who serves as treasurer of the Playdough Investment Club in Pinellas County. Members put part of their money in technology stocks, which paid off in the past, but has hurt them this year.
St. Petersburg-based Jabil Circuit Inc. had been a big winner for the club, but since September, stock in the electronics equipment manufacturer has plunged from $65 to about $23 a share.
"We were all kind of grumpy at the last meeting, but nobody has dropped out," Harshbarger said. "You just hope that the situation is not long term and that it will bounce back. We didn't do a whole lot of buying and selling during the year, but we did get out of Lucent before they took their big downturn."
Playdough is affiliated with Madison Heights, Mich.-based NAIC, which for 49 years has espoused buying stocks of companies poised for growth and then holding onto those shares for the long term.
The organization also emphasizes value, which prompted many clubs to shun tech companies and hot dot-com start-ups that traded at 30, 50 and even 100 times their earnings. Instead, they focused their buying on blue-chip stocks, which have held up better amid the market's backslide. And now they say they are being rewarded for such a patient approach.
"We do good when the market is in good times as well when the market is down," said Les Burton, president of Phoenix Investment Club in Lexington, Ky. "We don't change our philosophy in a bear market or a bull market. . . . "
Phoenix has risen just 4 percent this year. Still, the club maintains that buying up skyrocketing stocks is a sure way to lose money.
"We're hearing that many of our investors are happy that they have invested in the typical, large blue-chip companies that are holding their own in this market," said Jonathan Strong, manager of membership for NAIC.
Some clubs members who missed the high-tech run-up are now having fun buying bargain-priced computer, chip and network equipmentmakers. For example, Sacramento Money Makers in November bought 100 shares of chipmaker Intel at $39.95 _ 47 percent off its 52-week high of $75.81.