CLUBBING DEALS AMATEUR INVESTMENT GROUPS FIND BARGAINS AMID WALL STREET SLUMP.

Byline: Brent Hopkins Staff Writer

If you want to make some money, join the club.

The number of local investment clubs, social groups with an eye for making money, have more than tripled in the last five years. And even with a rocky stock market, they're still making money.

``The stock market hasn't been doing particularly well, but it's a shopping frenzy . . . right now,'' said Henry Bernard, coordinator for the San Fernando Valley's district of the National Association of Investors Corp. ``You can buy a lot of good companies cheap, which we know will bounce back from the stock market.''

NAIC boasts 38 clubs throughout the San Fernando Valley, offering novice investors a chance to gain a toehold in stock trading. The groups, typically small numbers of casual investors, use pooled money to build stock portfolios. A flagging market offers these clubs a key opportunity to pick up bargain stocks.

Bernard, a Lake View Terrace resident, began investing in 1984 with his wife and two children, then ages 9 and 12. They called their club the Buttonwood Four, named for the buttonwood tree that the original New York Stock Exchange was founded beneath. It was the beginning of a life of market watching for the young Bernards, Henry Jr. and Tanisha.

``Now they say, gee, thanks mom and dad for forcing us to listen to all that investment stuff.'' Bernard laughed. ``Of course, they had to go through their rock 'n' roll stages first, but they realize the importance now.''

In order to foster the children's burgeoning interest, the Buttonwood Four initially selected stocks that were familiar to youngsters: McDonald's and Disney. To build a sound portfolio, however, the club abided by the NAIC's basic rules, the same ones Bernard still preaches to the 38 local clubs he presides over for NAIC.

The national organization, which offers advice to smaller groups in money management, recommends that clubs put their money in growth companies, established firms that will double the investment in five years. Clubs are also advised to invest regularly, putting the same amount in each time. Building a diverse portfolio is also paramount, so if one firm tanks, then others can carry the slack.

Most clubs divide up the labor in planning their investments, Bernard said.

``They decide how much they'll have as dues each month and invest that,'' he said. ``They decide how much new stock they're going to buy. Each member is individually responsible for one company and reports on it every month, whether they want to stay invested in it.''

This is ideal for the entry-level stock market player, said Jack Kyser, chief economist of the Los Angeles Economic Development Corp.

``You get the benefit of a broader array of inputs, and it's a fun, social thing to do,'' he said. ``If you were a serious investor, you wouldn't join one.''

Club membership rose sharply in recent years, said Edwin Williams, chairman of NAIC's Los Angeles board. More than 13,000 people belong in the Los Angeles chapter, which boasts in excess of 1,000 clubs. The past year has seen a slowdown of new members, however.

``We're not seeing as many new people joining as we were a few years ago.,'' Williams said. ``The market not doing as well right now probably turned some people off.''

Williams has seen this play out with one of his own personal clubs. The Glendale-based Earnings Per Share saw its portfolio drop recently.

``Over the long haul, it's had a return of over 20 percent over the years,'' Williams said. ``It went down last year with the technology stocks, though.''

Traditional clubs' membership has also suffered with the advent of online brokerage firms, Kyser said.

``With a boom of online trading, it takes away some of the incentive to sit around and fiddle with clubs,'' he said. ``It's sort of passe.''

Still, those who are sticking with their groups are finding themselves on solid ground at the moment, Bernard said. Those supported by broad portfolios can capitalize on sagging markets to pick up traditionally strong stocks at bargain prices.

He declined to name specific firms, but suggested that prospective buyers should look for companies that have long track records of delivering results above 15 percent on investments. Though technology stocks boomed in the last few years, their subsequent poor performance makes them unappealing long-term picks, Bernard said.

For more durable companies, however, now could be the time to strike it rich.

``If you jump in at the right time, you can save a lot of money in the future,'' Bernard said. ``The good companies will survive these dips, so this is when you have a chance to increase your portfolio.''

TERMS FOR INVESTORS

Actual market: Used in the context of general equities.

Adjustable-rate preferred stock (ARPS): Publicly traded issues that may be collateralized by mortgages and MBS.

Annuity: A regular periodic payment made by an insurance company to a policy holder for a specific period of time.

Bear market: Any market in which prices decline by 20 percent or more for a prolonged period of time.

Bonds: An interest-bearing certificate issued by a government or business, redeemable on a specific date.

Broker: An individual who is paid a commission for executing customer orders.

Bull market: Any market in which prices are in an upward trend.

Dow Jones industrial average: The best-known in U.S. index of stocks. A price weighted average of 30 actively traded blue-chip stocks, primarily industrial industry stocks that trade on the New York Stock Exchange. The Dow is a barometer of how shares of the largest U.S. companies are performing.

Firm market: Prices at which a security can actually be bought or sold in decent sizes, as compound to an inside market with very little depth.

Investment club: A group of 12 to 20 people who gather for fun, education and profit sharing in the stock market.

Issue: A particular financial asset.

Mutual funds: Pools of money that are managed by an investment company and regulated by the Investment Company Act of 1940. They offer investors a variety of goals, depending on fund and investment charter.

Nasdaq system: National Association of Securities Dealers Automatic Quotation system. An electronic quotation systems that provides prices quotations to market participants about more actively traded common stock.

Portfolio: A collection of investors' securities.

Stock: Ownership of a corporation indicated by shares, which represent a price of the corporation's assets and earnings.

Trade: An oral or electronic transaction involving one party buying a security from another party.

Trade deficit or surplus: The difference in the value of the nation's imports over exports (deficit) or exports over imports (surplus).

Underlying stock: What supports the security or instrument that parties agree to exchange in a derivative contract.

Source: Yahoo Financial and Webster's New World Dictionary 

CAPTION(S):

photo, box

Photo: (color) Members of the From Scrubs to Riches investment club meet to go over their portfolio at Fiddler's Restaurant in Sylmar.

Evan Yee/Staff Photographer

Box: TERMS FOR INVESTORS (See text)