A lifetime of investing.

Veteran market maven's advice: You're in it for the long haul 

FEW PEOPLE CAN SAY THEY HAVE A LIFETIME OF investment experience. Grafton J. Daniels, 88, is one of them. Dubbed the "Godfather of Investment Clubs" by his fellow members, Daniels has helped to launch and counsel some 45 adult and two youth investment clubs in the Washington, D.C., area over the past 35 years. The clubs have had an average membership of 10 to 15 members.

His latest accomplishment is serving as founder and presiding partner of the St. George's Investment Club in Washington, D.C. The club is officially recognized as the No. 2 club in the Washington metropolitan area by the National Association of Investors Corp., the leading trade group for investment clubs. The 16-year-old club has 30 members, most of whom are members of St. George's Episcopal Church, including Daniels' daughter. Not including its octogenarian founder, the club's members range in age from 20 to 60 and its portfolio is valued at $300,000.

The club owns 62 stocks, 40 of which are large-capitalization stocks, 10 mid cap and 12 small cap. Daniels says the club's biggest stakes are in Intel (Nasdaq. INTC), 10%; Lucent Technologies (NYSE: LU), 10%; Safeway (NYSE: SWY), 5% and Time Warner (NYSE: TWX), 5%.

St. George's investment philosophy: 100% stocks, no bonds. Daniels says the club concentrates on growth stocks. "In order to double your money every five years, clubs have to pick stocks" that appreciate 15% a year, and growth-oriented shares fit the bill, he contends.

Daniels notes that members have to sign a form indicating they are committed to the club for a specific period of time. Since the median age of the club members is 60, that time period is just three years. As a result, the club's securities committee, comprised of eight of the members, tries to pick stocks that have the potential to return 30% annually. Daniels is head of that committee.

But Daniels hasn't just been helping adult investors make money. It was his granddaughter's interest in investing that started him thinking about forming a youth investment club. Another determining factor was the National March on the Mall for the Children of America. The June 1996 event had one main goal: "To stand up and save the children of America." Answering the call in his own way, Daniels helped launch the St. George's Junior Investment Club in December 1996. The 30 members of the club of kids aged 11 to 18 pay $5 in dues a month. The club has accumulated close to $25,000 since its founding.

A former Howard University student, Daniels was first introduced to the market in 1959 while he was working for the U.S. Geological Survey, a branch of the Department of the Interior. A friend approached him about selling mutual funds for the Hamilton Management Corp. He worked there part-time from 1959 to 1970. Six months after starting his job at Hamilton, he was appointed assistant district manager, overseeing a 25-member sales force. The group made cold calls to potential clients, selling mutual funds at a rate of $10 a month or for a lump sum of anywhere from $600 to $10,000 or more.

Putting his money where his mouth was, Daniels himself eventually invested $50 a month in a Hamilton-sponsored mutual fund, earning $13,000 on an average return of about 10% over 11 years.

In 1962, 13 men from the original Hamilton sales force formed the Progressive 20 Investment Club, each investing $10 a month, then, eventually, $20. When the club dissolved 27 years later, its money had increased to $75,000. Daniels received 7% of that, or about $5,250. He also garnered an average return of $10,250 from his investment in the Progressive 20 club.

While investing with his former colleagues in the Progressive 20 Investment Club, Daniels put in long hours learning the tricks of the market. In 1965, he took the National Association of Securities Dealers' exam, gained his broker's license and began selling stocks and bonds. He went on to work for a number of financial firms, including Westamerica Corp. in Newark, New Jersey, and Consolidated Financial Services, head-quartered in Silver Spring, Maryland.

He's taken some risks and has had his share of hard knocks. He lost a significant amount of money back in 1983-about $25,000-investing in diamonds while working as a district manager for San Diego-based International Diamond Corp. The company went belly up that year, and Daniels, who had been working there since 1979, retired from the business.

In spite of that setback, Daniels has remained invested in the market. Currently, he thinks the stock market is overvalued, and recommends investors "stay in cash, in view of the market's present situation," in order to "take advantage of a buy situation in this down market," or buy formerly expensive stocks on dips--a strategy a number of individual investors have used successfully in the nearly nine-year run of this bull market.

He says investors should be careful, however. "Bight now the market is going through a terrific correction, so watch your investment strategy. I'm waiting for the market to flatten out, so right now I'm not buying," he says.

"Always remember that all investing is long term," says Daniels. "You can't invest in stocks with the attitude that they will double in value overnight. You have to be willing to accept the risks and rewards of investing."