Investment clubs today hold a total of more than $175 billion worth of equities in their portfolios -- rivaling the largest mutual funds. Each month investment clubs add more than $50 million. This is big business.
What is an Investment Club? Investment clubs have been around for decades, and tens of thousands exist in America today. They've been growing in popularity in recent years. Members of investment clubs, often groups of friends or co-workers, typically meet once a month to discuss companies and make decisions about which stocks to buy and sell. At meetings they each contribute a small sum of money that is deposited in a joint account. Members take turns researching and reporting on promising companies in which they might invest or companies in which the club is already invested.
The National Association of Investors Corp. (NAIC), established in 1951, has set forth guidelines for running successful investment clubs. It urges members to:
* Invest money regularly, regardless of market conditions
* Reinvest all dividends and capital gains
* Buy stock in companies that are growing faster than most of their peers
* Diversify investments, not putting all the communal eggs into one basket
Friday, August 14, 2009
Tuesday, June 23, 2009
An investment club - #2
An investment club is a group of individuals who meet on a regular basis for the purpose of investing money.
The invested sums can be as little as $10 a month. The first investment club on record dates back to the 1800s in Western America. Various online communities devoted to this type of investing have recently emerged and have contributed to the personal investing boom in the United States. One of the reasons that people come together in investment clubs is to learn how to invest. While investment clubs are commonly organized with members contributing money and investing as a group in a single club portfolio, members of other self-directed investment clubs simply meet and learn about investing but invest on their own. With the advent of computers and the internet investment clubs have also moved into cyberspace.
Investment clubs are generally formed as general partnerships, but could also be formed as limited liability companies or limited liability partnerships (in states that allow them). While an investment club could incorporate, the double tax treatment on corporate distributions makes the corporate structure less desirable than a partnership. Typically, a general partnership does not generate any tax liability on its own; instead, any tax liability is passed through to members each year.
In the United States Investment club partnerships must file Form 1065 and Schedule K-1s with the IRS each year, and with states that require partnership filings. In the United Kingdom investment clubs and their members are required to submit form 185(new) to HMRC each year. Investment club accounting software can facilitate the management of a club's books and the preparation of tax filings.
Clubs offer the structure and support that many people need to get started investing, and clubs make it possible to get into the market without a big initial investment. The fact that they can accumulate large investment amounts from small individual investments also helps reduce the exposure to risk for individual investors.
The invested sums can be as little as $10 a month. The first investment club on record dates back to the 1800s in Western America. Various online communities devoted to this type of investing have recently emerged and have contributed to the personal investing boom in the United States. One of the reasons that people come together in investment clubs is to learn how to invest. While investment clubs are commonly organized with members contributing money and investing as a group in a single club portfolio, members of other self-directed investment clubs simply meet and learn about investing but invest on their own. With the advent of computers and the internet investment clubs have also moved into cyberspace.
Investment clubs are generally formed as general partnerships, but could also be formed as limited liability companies or limited liability partnerships (in states that allow them). While an investment club could incorporate, the double tax treatment on corporate distributions makes the corporate structure less desirable than a partnership. Typically, a general partnership does not generate any tax liability on its own; instead, any tax liability is passed through to members each year.
In the United States Investment club partnerships must file Form 1065 and Schedule K-1s with the IRS each year, and with states that require partnership filings. In the United Kingdom investment clubs and their members are required to submit form 185(new) to HMRC each year. Investment club accounting software can facilitate the management of a club's books and the preparation of tax filings.
Clubs offer the structure and support that many people need to get started investing, and clubs make it possible to get into the market without a big initial investment. The fact that they can accumulate large investment amounts from small individual investments also helps reduce the exposure to risk for individual investors.
Tuesday, June 2, 2009
GM to sell Hummer to Chinese company
GM to sell its Hummer brand to a Chinese manufacturer, while also revealing that it has potential buyers for its Saturn and Saab brands.
China's Sichuan Tengzhong Heavy Industrial Machinery Co. said Tuesday afternoon that it reached an agreement to acquire the brand from GM for an undisclosed ammount.
Sichuan Tengzhong deals in road construction, plastics, resins and other industrial products, but Hummer would be its first step into the automotive business.
China's Sichuan Tengzhong Heavy Industrial Machinery Co. said Tuesday afternoon that it reached an agreement to acquire the brand from GM for an undisclosed ammount.
Sichuan Tengzhong deals in road construction, plastics, resins and other industrial products, but Hummer would be its first step into the automotive business.
Thursday, May 28, 2009
Dow well above 10,000 by year-end
Stocks rallied sharply Wednesday, resuming the climb off the March lows, a move Paul Kedrosky attributes to the "‘the world hasn't ended' trade plus inventory restocking."
Citing the ongoing skepticism in the rally's staying power (a contrarian indicator), the Infectious Greed blogger and senior research advisor to Ten Asset Management believes the market is likely to "saw-tooth [its] way considerably higher through the rest of the year."
How considerably?
Kedrosky thinks the S&P could approach 1100 by year-end, which would translate into the Dow well above 10,000.
Citing the ongoing skepticism in the rally's staying power (a contrarian indicator), the Infectious Greed blogger and senior research advisor to Ten Asset Management believes the market is likely to "saw-tooth [its] way considerably higher through the rest of the year."
How considerably?
Kedrosky thinks the S&P could approach 1100 by year-end, which would translate into the Dow well above 10,000.
Monday, April 13, 2009
Что будет с российской экономикой и будет ли вторая волна банковского кризиса?
http://valdrus.livejournal.com/164926.html
Классический вопрос: «Что будет с российской экономикой и будет ли вторая волна банковского кризиса? с российской экономикой будет вторая волна банковского кризиса, который, как уже все говорят, будет вызван неплатежами предприятий. И мы видим очень важную вещь. Мы видим, что российские активы стоят дешево, а их долги стоят дорого. Видимо, цена долгов отражает желание российских предпринимателей договариваться с банками, а цена российских активов отражает тот факт, что частная собственность в России не стоит ничего.
Т.е. если бы Ходорковский не сидел за решеткой, а в «Мечел» не посылали бы доктора, то российские активы стоили бы гораздо дороже и по российским компаниям не звенели бы «маржин коллы». Почему российские компании набрали так много долгов? Потому что они занимали на Западе те деньги, которые им приходилось выплачивать в качестве налогов, которые шли в тот самый стабилизационный фонд. Куда ушли эти долги? На развитие производства? Прежде всего, на покупку новых активов на Западе. Т.е. российские компании занимали под залог своих российских активов деньги на Западе, под залог активов, на которые могут наложить лапу российские власти. Покупали активы на Западе, где российские власти на них лапу не могут наложить.
http://dr-bykov.livejournal.com/
Subject: Re: Что будет с российской экономикой и будет ли вторая
Согласен на все 100%. Вторая волна не может не быть. ИМХО. У меня на работе (СПбГУ, между прочим, - национальное достояние), а денег на мобильность научных кадров и студентов нет совсем. Никто никуда не ездит, опытом не обменивается, науку не развивает, да и зачем? Всё равно, все инновации приходят с Запада :( Самая большая проблема - это кризис неплатежей по кредитам. Кстати, хороший показатель - это задержки по зарплатам. Недавно слышал, что опросы населения показывают, что 30% россиян столкнулись с задержками по зарплате. Вот и отгадайте с трёх раз, признаком ЧЕГО являются задержки по зарплате...
Классический вопрос: «Что будет с российской экономикой и будет ли вторая волна банковского кризиса? с российской экономикой будет вторая волна банковского кризиса, который, как уже все говорят, будет вызван неплатежами предприятий. И мы видим очень важную вещь. Мы видим, что российские активы стоят дешево, а их долги стоят дорого. Видимо, цена долгов отражает желание российских предпринимателей договариваться с банками, а цена российских активов отражает тот факт, что частная собственность в России не стоит ничего.
Т.е. если бы Ходорковский не сидел за решеткой, а в «Мечел» не посылали бы доктора, то российские активы стоили бы гораздо дороже и по российским компаниям не звенели бы «маржин коллы». Почему российские компании набрали так много долгов? Потому что они занимали на Западе те деньги, которые им приходилось выплачивать в качестве налогов, которые шли в тот самый стабилизационный фонд. Куда ушли эти долги? На развитие производства? Прежде всего, на покупку новых активов на Западе. Т.е. российские компании занимали под залог своих российских активов деньги на Западе, под залог активов, на которые могут наложить лапу российские власти. Покупали активы на Западе, где российские власти на них лапу не могут наложить.
http://dr-bykov.livejournal.com/
Subject: Re: Что будет с российской экономикой и будет ли вторая
Согласен на все 100%. Вторая волна не может не быть. ИМХО. У меня на работе (СПбГУ, между прочим, - национальное достояние), а денег на мобильность научных кадров и студентов нет совсем. Никто никуда не ездит, опытом не обменивается, науку не развивает, да и зачем? Всё равно, все инновации приходят с Запада :( Самая большая проблема - это кризис неплатежей по кредитам. Кстати, хороший показатель - это задержки по зарплатам. Недавно слышал, что опросы населения показывают, что 30% россиян столкнулись с задержками по зарплате. Вот и отгадайте с трёх раз, признаком ЧЕГО являются задержки по зарплате...
Investment Clubs in UK
Why start a club?
* Low risk
Pooling a relatively small amount of money with others every month will be an ideal way to gain hands-on experience of how the stock market works.
* Informed investments
The collective brain power and experience of people who each have knowledge and experience of different market sectors will produce opinions and information that will guide you to sensible decisions.
* Spread the load
Carrying out research into potential investments can be structured and spread amongst the membership.
* Profit opportunities
Surveys show that collective investment decisions based on discussion and democratic choice are more likely to produce sustained profits.
* Low risk
Pooling a relatively small amount of money with others every month will be an ideal way to gain hands-on experience of how the stock market works.
* Informed investments
The collective brain power and experience of people who each have knowledge and experience of different market sectors will produce opinions and information that will guide you to sensible decisions.
* Spread the load
Carrying out research into potential investments can be structured and spread amongst the membership.
* Profit opportunities
Surveys show that collective investment decisions based on discussion and democratic choice are more likely to produce sustained profits.
Wednesday, April 8, 2009
Limiting Losses
Risk management - I could not stress more the importance of this.
It is simply not possible for any trader - whether amateur, professional or anywhere in between - to avoid every single loss. The disciplined trader is able to accept losses without emotional upheaval. At the same time, however, there are systematic methods by which you can ensure that losses are kept to a minimum.
Every trader should employ a loss-limit system whereby he or she limits losses to a fixed percentage of assets, or a fixed percentage loss from capital employed in a single trade. Think of such a system as a circuit breaker on the trade. After a certain percentage has been lost from his or her trading account or principal traded, the trader may very well stop trading entirely or may immediately exit the losing position. With this system, exiting a losing position is an unemotional decision that is not affected by any hopes that "the market is sure to turn around any minute now."
A common level of acceptable loss for one's trading account is 2% of equity in the trading account.
Monthly Loss Limit of 6%
So, you have now established a system whereby your loss from each individual trade is limited to 2% of your risk capital. A general rule for overall monthly losses is a maximum of 6% of your portfolio. As soon as your account equity dips to 6% below that which it registered on the last day of the previous month, stop trading! Yes, you heard me correctly. When you have hit your 6% loss limit, cease trading entirely for the rest of the month.
Employing a 6% monthly loss limit allows the trader to hold three open positions with potential for 2% losses each, or six open positions with a potential for 1% losses each.
It is simply not possible for any trader - whether amateur, professional or anywhere in between - to avoid every single loss. The disciplined trader is able to accept losses without emotional upheaval. At the same time, however, there are systematic methods by which you can ensure that losses are kept to a minimum.
Every trader should employ a loss-limit system whereby he or she limits losses to a fixed percentage of assets, or a fixed percentage loss from capital employed in a single trade. Think of such a system as a circuit breaker on the trade. After a certain percentage has been lost from his or her trading account or principal traded, the trader may very well stop trading entirely or may immediately exit the losing position. With this system, exiting a losing position is an unemotional decision that is not affected by any hopes that "the market is sure to turn around any minute now."
A common level of acceptable loss for one's trading account is 2% of equity in the trading account.
Monthly Loss Limit of 6%
So, you have now established a system whereby your loss from each individual trade is limited to 2% of your risk capital. A general rule for overall monthly losses is a maximum of 6% of your portfolio. As soon as your account equity dips to 6% below that which it registered on the last day of the previous month, stop trading! Yes, you heard me correctly. When you have hit your 6% loss limit, cease trading entirely for the rest of the month.
Employing a 6% monthly loss limit allows the trader to hold three open positions with potential for 2% losses each, or six open positions with a potential for 1% losses each.
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