Strength in numbers: How 10 St. John's women are winning with their self-made investment club
Ride it out, be patient — and have a glass of wine.
For ten years, ten women in St. John's got together once every month. They chatted, they drank wine, they caught up with one another.
And they discussed the stock market.
They called themselves the Fancy Feast Investment Group, "because we didn't want to be old women living off cat food when we retired," said Joanne O'Leary, one of the investment club's members.
Pooling their money and resources, they learned about finances, the stock market, economics and how to build spreadsheets to calculate expected returns. They took risks, they made a few mistakes, and they learned a lot about themselves.
They learned how to be their own financial advisors and, in the process, they doubled their investments.
"More people need to dig in and unravel some of this stuff because in the industry, they mystify this whole financial advising thing and they make it complicated.," said O'Leary.
"I don't have a financial background, I never did. It's not complicated. In fact it's very simple."
Following the blueprints laid out in a book called Chicks Building a Nest Egg: How 10 Skirts Beat the Pants off Wall Street, the Fancy Feast Investment Group had a president, a vice-president, a treasurer and a secretary. They opened a bank account and worked with a bank to open a brokerage account for the group, making all the purchases themselves online.
The women didn't have much disposable income, so they focused on the frequency of their contributions, not the quantity. Every month, each member contributed fifty dollars.
Gill Marx, a member of the group, says even half that amount would help get a group up off the ground.
"Don't be intimidated [if] you don't have a ton of money," she said. "If it's 50 dollars a month or it's 25 dollars a month... all of a sudden you have a little bit of money to invest."
The amount frequencies of the investments were laid out in contract, which was drawn up by a member of the group who worked as a lawyer. The contract also laid out what would happen if a member wanted to leave the group, as well as how the group would go about choosing and making their investments.
Once the operational details were out of the way, they established their goals. They wanted to learn, they wanted to stick to stocks, and they wanted to play it safe.
"I'm not a huge risk-taker," said Marx. "I didn't want to go in and buy stocks and go for huge return on investment because ... well, I don't think any of us really had the money to lose."
So they decided they'd invest for the long-term, looking for stocks with moderate risk that would pay out moderate returns over a longer period of time.
Think about the kids
Members would each choose a company they were interested in and research the possible pros and cons of investing in its stocks.
"When we first started the investment club, people would just come with the name of a company and say, 'I heard this was really good,'" said O'Leary. "But we needed more meat around it."
So O'Leary built a spreadsheet for the group so that each member could plug in numbers for the company they'd been researching. Those numbers would come from the company's financial reports — any publicly traded company must provide financial reports, says O'Leary, and those reports are often on the company's website.
Once the numbers were plugged in, the spreadsheet would give the company's stock an overall score.
At the next meeting, that member would pitch their stock and the Fancy Feast women would debate it, going over the numbers, and determining whether the score was accurate and whether they should put their money behind it.
Ultimately, all stocks pitched and approved had to meet thirteen criteria laid out by the group, which they largely based on twelve principles — the "Chick's Dozen" — outlined in Chicks Building a Nest Egg. For example, the company should make products that were found around an average home, or that were used again and again.
"One of the rules was, what can we invest in that we could explain to a five-year-old?" said Marx.
That rule in particular was their guiding light.
"Because, essentially, that's the way I felt when I started: if you don't speak in five-year-old language about stocks and investment, I'm not going to get it."
The Fancy Feast Group also tried to keep their stocks Canadian.
For O'Leary, the process showed her just how possible it was for people to take control of their own finances, by doing what the experts do — assessing risk by acquiring as much knowledge as possible about the things they were investing in before investing and hoping for the best.
'It's really easy to be impulsive'
Though they stuck close to the guide book, Marx said they did make a few mistakes.
"It's really easy to be impulsive and it's very easy to be influenced by media," she said. "We had investments in companies that were showing a great return on investment and then there would be a media report about a personality there and everybody would go, mmmm, that's not good, maybe we should get out. And we dumped stocks as a result, which we never should have done."
It was a tough way to learn the most important lesson of investing for the long-term.
"Being patient, in terms of letting it play out," she said. "That was one of my biggest lessons: there's always going to be hills and valleys and that's just the way it is. If you wait it out you will likely come back to a medium level and not necessarily lose everything."
"If more people knew how simple it was and how easy it was to demystify the financial industry, I think it would bode well for everyone," she said.