Newspaper article THE JOURNAL RECORD

Stock Plunge Doesn't Spur Strategic Change by Clubs

Newspaper article THE JOURNAL RECORD

Stock Plunge Doesn't Spur Strategic Change by Clubs

Article excerpt

SPRING HOUSE, Pa. -- The Pennsylvania Caveat Emptor Investment Club has its routine: Members convene on the first Wednesday of each month to review the club's stock holdings, analyze new companies and vote on new stock purchases.

It takes a lot to shake this routine -- more, at least, than a 512-point selloff in the Dow Jones industrial average. Though the Aug. 31 plunge battered the club's portfolio, members still waited until Wednesday evening to assess the damage.

"Basically, we got wiped out," Tony Catanzaro, the club's treasurer, said pleasantly. He explained to other members that their 1998 gains of 13.5 percent were almost erased by the market's fall. "But that just means we've got some buying opportunities."

And that's exactly what the club focused on for the next two hours at the Old York Road Country Club in Spring House, a suburb of Philadelphia.

If anything, the club's cool response to the market's convulsions reflected its enthusiastic embrace of the principles of the National Association of Investors Corp.

The association, a nonprofit group in Madison Heights, Mich., that promotes clubs as a way to educate consumers about the benefits of long-term investing, has built its philosophy on four core ideas: Investing regularly to take advantage of dollar-cost averaging, reinvesting earnings to gain the benefits of compounding, investing in growth companies, and diversifying to spread risk.

This approach has caught on. The association says the number of clubs nationwide has jumped to more than 37,500 from 10,000 in 1993. The average club is 8 1/2 years old, has 14 members who each invest $58 a month and enjoys a 12.4 percent annual return.

Caveat Emptor is somewhat newer -- just three years old; otherwise, it seems to hew closely to the average. It has 16 members evenly split between men and women who must contribute at least $50 a month, though they can contribute more. Club members range in age from 27 to 48 and include a podiatrist, a research biologist, a sign painter and a carpenter.

The club owns shares in Abbott Laboratories, Aflac, Callaway Golf, Diebold, Halliburton, Halter Marine, Hannaford Brothers, Invacare, Lucent Technologies, Paychex, Speedway Motorsports, Synovus Financial, Trinity Industries, Vishay Intertechnology and XXSYS Technologies.

Catanzaro, a purchasing manager for a pharmaceutical company, said the club's portfolio outperformed the average for NAIC investment clubs in 1996 and 1997, posting annual returns of 18 percent and 25 percent.

The club's total assets, which peaked at the end of June at $32,000, fell almost 19 percent, to $26,000, by Aug. …

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