Buy, buy, buy!
Passions run high over the peppermint tea at Sunnyside Ladies Investment Club ...
YOU do not have to be a Wolf of Wall Street to play the stock market. Investment clubs are a great way to pool resources and knowledge and run a portfolio of shares. Although no guarantee against share price falls, such clubs can be both rewarding and fun. HOLLY BLACK reports.
IT IS Friday afternoon in a leafy Hertfordshire cul-de-sac. In a bright, homely living room, over peppermint tea and sultana cookies, a heated discussion is erupting.
The share price of engineering group Costain is up 77 per cent since the Sunnyside Ladies Investment Club invested in March 2015, but Mary Mitchell, one of nine club members, is digging in her heels.
She says: ‘We sold shares in funeral group Dignity because we thought they had gone up enough, and now they have tripled. I do not want to make that mistake again.’
Sunnyside is one of thousands of investment clubs across the country. The group meets once a month to discuss ideas and invest money collectively.
The club was formed when founding member Karen’s husband was starting his own club and invited her to get involved. Retired university lecturer Karen says: ‘I said no thank you, I will start one of my own. I liked the idea of an allladies group. Now, there is a friendly rivalry between the two clubs.’
An investment club is any group of two or more people who pool their money to invest.
This can be done in the same way that an individual would invest through a broker such as Hargreaves Lansdown or The Share Centre.
Every group needs a chairman or chairwoman to oversee proceedings and to trade shares chosen by the group. A treasurer handles the money and oversees the progress of the investment portfolio.
There is also usually a secretary, who will write the minutes of each meeting and deal with any administration.
More than 2,000 clubs are registered with The Share Centre. The typical group has 14 members with an average age of 56 and each person invests £25 a month.
While the bursting of the dotcom bubble in 2000 saw many clubs disband, 42 per cent of the clubs now registered with The Share Centre were started since the 2008 financial crisis. The potential to make money is a bonus of this type of hobby, but such groups offer the chance to make long-term friendships too. THERE are 21 shares in the Sunnyside investment portfolio and the ladies have seen their money grow 13 per cent since they last took profits.
Their best ever performer was a biotech company called Protherics whose shares they bought at just 16p. It went on to be acquired by pharmaceutical giant BTG at 60p a share. But not all investments are so successful. Two of the shares have fallen around 90 per cent.
‘We don’t even bother looking at those now – it would cost more in fees to sell the shares than they are worth so we just keep hold of them,’ says Stella Mehew, who is taking minutes.
Some groups have something called a stoploss in place, which means that if any share falls more than an agreed amount, say 20 per cent, it is automatically sold. Others discuss each investment on a case-bycase basis.
Members get information and share tips from newspapers, magazines, online forums and specialist websites. Many take newspaper cuttings to show the group while others send emails about possible investments between meetings.
But these groups are not just about investing. The ladies of Sunnyside plan meals out and theatre trips once the business part of the meeting is over.
A challenge for any group is to agree on what to do with the portfolio when it builds up. Most agree to take a slice of any profits.
One club registered with The Share Centre empties its account every few years to fund a trip to Las Vegas – the group has been three times in its 12-year history.
Some clubs have had the same members since they started, others see individuals come and go. The youngest member of Sunnyside is 63, while they are planning celebrations for the oldest member, who turns 90 next month.
Darren Cornish, head of customer experience at The Share Centre, says: ‘There used to be a perception that investment clubs were just for retirees, but the average age of group members is coming down.
‘We see groups of friends, mums and daughters, dads and sons, all getting together to do this. For most people it is social. It is a way to meet up once a month, have a drink and kick some investment ideas around.’