Mutual Investment Club of Detroit: Riches from Humble Beginnings With BC-Business Sages
DETROIT (AP) _ The story of the Mutual Investment Club of Detroit is a textbook example of the wisdom of investing for the long term.
Below, at a glance, are some facts about the club and commentary from AP Business Analyst John Cunniff, who first reported on the club in the 1960s:
ORIGIN: The club was organized in 1940, when some young men tried to put the Great Depression behind them and concentrate on better times.
LEADERSHIP: Fred Russell, a fellow with little cash but big hopes, had the idea for a club to invest in stocks. George Nicholson, a young broker, drew up the guidelines, becoming widely recognized as the father of the investment club movement. Thomas O’Hara, a young accountant, made investment clubs his career.
GUIDING PRINCIPLES: Invest small amounts regularly, usually each month. Reinvest all dividends. Invest in growth companies, those growing faster than their industries and the general economy.
MEMBERSHIP: As the Detroit club succeeded after World War II it gave birth to the National Association of Investors Corp., which now has 126,000 members - 14,631 as individuals, the rest in 6,933 clubs.
PORTFOLIO GROWTH: $10 and $20 investments built assets worth millions.
SAMPLE INVESTMENT: The goal was to double the investment within five years, but sometimes the results were better. For example, the purchase of American Cement at $2.75 a share and its sale six years later for about $32.
WITHDRAWALS: More than $1 million was withdrawn over the years to buy houses, finance businesses, pay tuitions, provide retirements.
COMMENTARY: There are many messages in the Mutual Club’s experience.
-Have patience. Recognize that time is a silent ingredient as important to a portfolio as yeast is to bread.
-Do your homework; know your investments. Invest in individual stocks, not in ″the market.″
-Invest for the long term. Don’t try to time, trade or outguess the market, and forget about trying to fathom the short-term ups and downs of the economic cycle.
-Recognize that ″down″ markets are temporary, to be followed by better times.
-Be confident that America’s economy continues to grow, even if it develops a cold from time to time.
End adv for Sunday July 8