Sunday, November 22, 2015

Breaking Up is Hard To Do

Another diversion from healthy eating, this time to tell you about a stressful situation in our lives right now.  Stan and I have decided to leave the investment club we joined a bit over a year ago, after gradually realizing our ideas about investing and how an investment club should operate are incompatible with those of the club founder and president.

It's funny how stressful this can be - sort of like quitting a job or getting a divorce.  Leaving any group of nice people can be sad, and I think this situation is extra stressful for two reasons - first of all, besides just not attending meetings any more, we will be withdrawing the money we have invested over our time in the club.  This is not a great time, as the stocks held by the club have been in a swoon lately, and we'll be leaving with a significant percent less money than we have put in.  Second, I think having shared investments may make the group a bit closer than just having fun together.  We've all contributed a lot of time not just for meetings, but doing homework, attending educational workshops and even a weekend retreat.  In the process we've enjoyed getting to know these folks.  It's fun to be part of a diverse group of smart people, working together for a common goal.

So why are we leaving?  Two reasons:  one, the way the club chooses and invests in companies is not compatible with what we have learned about investing, and two - the more important to me - instead of discussing and comparing companies and voting on every purchase or sale, the president has great latitude to buy and sell, based on a few loose, and we think faulty, criteria.  This is fair, as that one person owns a large proportion of the club's funds, but makes it less satisfying for us.

A bit of background:  our club is part of Better Investing, a national non-profit organization that helps educate people about investing, and provides an umbrella organization with chapters throughout the country for many, many individual investment clubs.  I've been a member of the organization for many years, part of the time in a different club and part as an individual.  We're leaving our club, but will remain individual members of Better Investing and perhaps find a different club.  I am on the board of the Puget Sound Chapter, (board Secretary, woo woo) and will remain so for at least the rest of my one-year term.

We feel the method of investing we learned from the organization is a solid strategy for people who want to choose individual company stocks.   We just attended our chapter's annual educational conference a few weeks ago and it was wonderful - very motivating to hear successful folks who are also great teachers talk about investing, stressing the organization's goal - to buy fundamentally high quality companies and only when their price is lower than average. They teach a specific way to study and compare companies and it works!

This is Costco's yearly Sales, Pretax Profits, and Earnings.  Better Investing likes to see these lines up, straight and parallel.

 Here's Starbucks.  That dip is the recession of 2008-9.

 Look at Priceline!

Other companies are more cyclical - not necessarily bad investments, if you buy and sell at the right time, but Better Investing recommends against them unless you are an experienced investor.

For example, Ford:

or Century Link:

So, we sent our resignation email last week, having waited until after the conference so as not to cause any drama or awkward feelings during the weekend.  We felt a bit sorry about talking with our fellow club members as though nothing was changing, and we said so in the email, as well as saying how we have enjoyed the social aspects of the club and hope to stay in touch at Better Investing events.  We kept it as brief and positive as possible.  We are gratified to see the emails that have arrived in response from club members, although a bit sorry to have no acknowledgement at all from the President or Treasurer.

I have changed jobs many times and I have noticed that after announcing I'm leaving a company, several people who I didn't know very well during my time there would come and talk to me.  It is though it's now "safe" to express their discontent, since I have obviously expressed mine by planning to leave.  We're seeing some of that now in emails from our club-mates, all so far expressing disappointment that we're leaving.  Some have expressed interest in what we'll do next and in staying in touch in the future, to which we are replying we'd love to stay in contact.  I'm not interested in starting a club myself - too much work and responsibility - but we're happy to discuss our ideas with anyone who asks.  It's nice to know they like us and will miss our participation  : )

 On a lighter note, I'm writing this post from a nice little house in Cannon Beach, Oregon.  Stan and I are spending some time here both as a relaxing get-away, and also to see a bit of what it would be like to retire to a smaller town, maybe on the coast.  (No near-term plans - I know it will probably take decades for me to pry Stan and his treasures from the big house we have now.  I just wanted to see what it would be like.)

We have some goals while we're here - mainly to do some study work on our stock portfolios and to lose a bit of weight.  I said I planned to walk every day we're here, rain or shine.  Well, for several days it rained really hard!  I walked one day in the rain and nearly got blown off the beach!  Since the sun has come out we've walked a lot.  Here are some photos Stan took yesterday and today:

1 comment:

  1. Pam was too kind. The president ran our club (previous club) as an investment fund in which members contributed but had little say in how the money was invested. I think this is a violation of SEC rules for investment clubs but I am not an attorney so this is just my opinion. More important, much more important, he was doing a bad job. His approach appeared to be to combine high risk with low skill in a way that I did not find attractive.