Learning by Doing

On the surface anyway, the women of the 1999 Investment Club don’t seem to have much in common with the Beardstown Ladies.

The Ladies, many of whom have spent most of their lives in the small Illinois town their club is named after, have for years been parlaying their small monthly contributions into gains that consistently beat stock market averages, a record that’s inspired best-selling books trumpeting their successful investment strategies.

The ladies of the newer 1999 Investment Club live in West Los Angeles and the San Fernando Valley. Many travel frequently--in fact, club conversations about trips to New York and Europe are fairly common. There is no monthly contribution; members pay a hefty amount upfront instead. And their portfolio, although it has performed respectably so far, is no index-beater.

What both groups share is the belief that it is vitally important for women to learn to manage their money.

The women from Beardstown were an inspiration for the well-heeled West Coast conclave that since early 1996 has been meeting the third Tuesday of every month in a Century City law office. The “1999” in the name refers to the building’s address.

“I thought, ‘Gosh, if they can do that, I can do that,’ ” said 1999 founder Nina Pircher, 55. “I wanted to know more about the stock market, but I didn’t want to study on my own--I wanted company.”

Pircher, a former fund-raiser for UC Berkeley, drew on her networking and professional skills in her effort to get the club started. She made phone calls, begged, cajoled, even put together an information packet containing articles about women and money that she sent to potential recruits.

“I got so many rejections I couldn’t believe it,” Pircher recalled of the several months it took to get it all going. “At least three dozen women said no. One even said she couldn’t join because she was redecorating her house and couldn’t afford dues.”

Pircher’s perseverance paid off. At the group’s first meeting in early 1996 were two dozen women eager to learn the ways and means of the investment world.

And, Pircher’s early experience notwithstanding, more individuals than ever want to make investing a group effort. The number of investment clubs in the United States has skyrocketed in the last several years. In 1992, there were 8,200 investment clubs registered with the National Assn. of Investors Corp.; today, there are 33,500.

Much of the increase can be attributed to the fantastic performance of the U.S. stock market over the last several years. But the growth has also been fueled by the increasing number of all-women clubs, a trend many analysts lay at the feet of the Beardstown Ladies. Since the best-selling “The Beardstown Ladies’ Common-Sense Investment Guide” first hit bookstores in 1994, women-only investment clubs have been forming at twice the rate of all-male clubs. As of this year, the association says, about half of all investing clubs are all-women, and roughly 12% are all-men.

“It seemed like men always knew about investing, but I never knew any of the buzzwords,” said 1999 club member Pat Illing, 41, proprietor of Beverly Hills Bikini Shop.

Added architect Margot Alofsin, 40: “The idea behind this club is that at any point in anyone’s life, people need to take care of themselves financially. Some women in the club are very financially secure now, but that could change. What if their husband passes away or runs off with some young thing?”

As these remarks suggest, education is one of the primary motivators for the women of 1999. Most members say they knew little about investing before they joined the club. In fact, before even considering their first stock purchase, members’ first six months of meetings were devoted to tutorials led by the club’s advisor, stockbroker Joan Seidel, on everything from deciphering newspaper business pages to the basics of investing in mutual funds.

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So far, it appears that the slow start strategy has paid off. The club’s portfolio has done better than most mutual funds, but its return is still slightly below that of the benchmark Standard & Poor’s 500-stock index for the same period.

The group owns shares in 15 corporations. New members of the group, which is private, must pony up $6,800 when they join, up from the $5,000 the founding members paid.

Members are currently divided into several research groups, which make presentations on stocks the group owns or is contemplating purchasing. The women say they can spend hours investigating a company, studying everything from its price-to-earnings ratios to the products it has in development.

The majority of purchases have so far been winners.

One of the group’s first purchases, made in July 1996, was about 100 shares of Microsoft, then trading at about $58 a share. The women have more than doubled their money by betting on Bill Gates--the stock closed at $143.81 on Monday.

The group has also done well investing in Walt Disney, Gap, Johnson & Johnson, Procter & Gamble and Starwood Lodging Trust.

It’s worth noting, however, that 1999 enjoys advantages that most other clubs--including the Beardstown Ladies--can only dream about. Many of 1999’s members have mates or close relatives who are active, even avid, investors. When companies are discussed, it’s not unusual for one of the women to volunteer what her broker thinks about the proposed investment.

The group also enjoys better-than-average access to other experts.

For example, when the group was looking at hotel investments not long ago, members got a presentation from brothers Edward and Tommy Slatkin, owners of Santa Monica’s Shutters on the Beach Hotel. The men are, respectively, the husband and brother-in-law of club member Dana Slatkin. (The Slatkin brothers suggested that the group not purchase shares in any hotel company when they spoke to the women last year.)

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None of which is to say that everything the group has picked has turned to gold. One of their first picks was Amgen, the biotechnology and pharmaceutical concern based in Thousand Oaks. The stock’s price subsequently fell, and the women voted to sell it a few months ago.

The Amgen purchase points to one problem the group has faced: Members tend to develop a strong affection for the companies they research.

Rachelle Mark, 52, not only read up on Amgen, she drove up to Thousand Oaks to visit its headquarters. “I called their public relations department and told them I would like to visit the plant. They gave me a tour, showed me a slide show, even treated me to lunch,” Mark recalled.

True, the women have not bought shares in the majority of companies they’ve looked at, but that’s partly because Seidel, who attends all of their meetings, has often had to provide the counterpoint to an enthusiastic presentation, pointing out stock fundamentals such as price-to-earnings ratios that could indicate trouble ahead, or facts about a company that she believes deserve greater consideration.

“The presenters put a lot of time into research,” Seidel said. “It’s almost as if they have a vested interest.”

A now slightly rueful Mark agrees with that opinion. “I may have gotten more involved with Amgen because I visited it,” she acknowledged.

Seidel pointed out, however, that club members’ presentations have improved dramatically in the last year, adding that she no longer has to remind them to look into a company’s long-range prospects or evaluate how those compare with its competitors’.

Yet increased financial know-how doesn’t always go hand-in-hand with group harmony. Turnover has been high; about a third of the original members have moved on, most citing the heavy time commitment membership requires. (Readers should note that membership is by invitation only.)

In addition, there has been an ongoing dispute about investment objectives. Several arguments have revolved around the thorny issue of socially conscious investing. The majority of members say that trying to make their investments meet such a test would be too complicated, because different people will have different investment taboos.

Still, that didn’t prevent a conflict from erupting over Nike last April.

Most of the group said yes to buying shares of the sports apparel giant, over the objections of a small minority that cited concerns about the company’s highly controversial involvement with employment practices in developing countries.

As it turns out, the stock has been a laggard, and those who originally opposed the purchase are pressing for a quick sale.

“They’re nothing but hot water,” Alofsin said of her discomfort with investing in Nike.

“The attitude of some of the club is that it’s just business, but it’s not. My feeling is that we live in an affluent community here in West Los Angeles and there is no reason to patronize a company that doesn’t have socially acceptable practices.”

Alofsin reiterated this view during a recent discussion about hardware chain Home Depot. Presenter Jean Abarbanel was initially enthusiastic, pointing out that not only was the company benefiting from the current surge in home buying, but also that she herself had recently purchased bathroom equipment at a local branch. But when Abarbanel mentioned that Home Depot had recently settled a class-action sexual discrimination case brought by female employees, Alofsin balked. “I don’t want to buy anything that discriminates against women,” she said.

“That can be your view, Margot, but it’s not germane to the discussion,” Pircher responded.

After an extended give-and-take, the group voted Home Depot down, apparently swayed by both Alofsin and Seidel, who saw little prospect for growth in the stock.

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Yet despite differences, the group continues to thrive. Members continue to be enthusiastic, maintaining that belonging to the club is an excellent educational experience, as well as an empowering one.

When Rachelle Mark’s husband died last year, the artist was confronted with the daunting task of managing the estate. “I was totally taken care of financially during my marriage,” Mark said. “If it wasn’t for this group, I wouldn’t have a lot of awareness of investment possibilities, and I would’ve just placed myself in someone’s hands.”

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Helaine Olen, a Santa Monica-based freelance writer, is a frequent contributor to The Times. She can be reached on the Internet at [email protected]

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1999 Investment Club Portfolio

The 1999 Investment Club is a private group of about 25 women who meet monthly to study aspects of the stock market and discuss purchases for their portfolio. Members currently pay $6,800 upon joining. The group is advised by stockbroker Joan Seidel, who also is Beverly Hills city treasurer.

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Number of Purchase Monday’s Company shares price closing price Coca-Cola 200 $59.50 $64.56 Walt Disney 160 61.36 97.63 Ericsson 200 44.06 41.75 Gap 150 31.75 55.50 Gillette 100 67.00 93.00 Intel 300 36.44 81.50 Johnson & Johnson 100 46.75 64.69 Lucent Technologies 100 88.36 82.63 Microsoft 100 58.50 143.41 Motorola 50 89.31 66.38 NationsBank 100 59.44 61.38 Nike 100 59.00 49.81 Pfizer 200 36.12 76.00 Procter & Gamble 100 68.75 77.94 Starwood Lodging Trust 100 41.63 56.19 Current value of portfolio $151,018.80 Cash available (approx.) $26,000.00 Total assets $177,018.80

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Sources: Joan Seidel for the 1999 Investment Club, Bloomberg News