Setting out on your own.

A benefit of group investing is learning how to build a personal portfolio

Danielle Fly the has been a stock owner since she was a toddler, but it wasn't until she co-founded the investment club Stock MarKids that she was schooled in sound stock picking. Flythe and her grandmother, Lynn Roney, started the parent-child investment club in 1996. Roney nurtured Flythe's interest in investing. "While having one of our weekly lunches at McDonald's, when Danielle was 3 years old, I told her that I was really glad she liked McDonald's because I am a part owner," Roney explains. Flythe was immediately intrigued with the idea of owning McDonald's. Roney recalls her saying, "I want to be an owner too, Nana."

Roney purchased $100 worth of McDonald's stock for Flythe the following week; the stock split a month later. When Flythe turned 10, Roney decided to expose her to the business side of investing in a fun and instructive environment. The result was Stock MarKids, which today has 13 members who range in age from 9 to 16 and live in Washington, D.C., and the surrounding area. Setting up the club has taught members to become self-reliant investors.

Now 16, Flythe recalls one of her peers making a passionate presentation on PSINet. He personally owned shares of the unprofitable company. After spirited discussion, the final decision on the stock was tabled, and the club was spared a major loss when PSINet filed for bankruptcy this past June. Flythe, who voted against the purchase, learned to always "look at the facts" when making investment decisions. Another lesson: "Being emotionally attached to a stock" is a flawed investment strategy.

Each member of Stock MarKids votes, monitors a stock, and makes presentations using the "adding strategy" concept found in the book Wow the Dow: The Complete Guide to Teaching Your Kids How to Invest in the Stock Market (Simon & Schuster, $14). Roney, who coauthored the book with Pat Smith, says the kids needed to understand the personal ownership aspects of investing and managing the risks involved. So, in 1999, the group liquidated most of its holdings in order to start private portfolios. Earlier this year, the club's portfolio peaked at $30,000, but in July, assets were valued at $3,000.

Flythe, who opened an account with discount broker Charles Schwab, continues investing in companies where she spends her money. "I'm a Barbie collector, so I bought shares of Mattel. I like shopping at the Limited, so I bought their stock toot," she says. She added General Electric (NYSE: GE) to her personal portfolio after monitoring it for Stock MarKids, before the group decided to buy shares in the company. The year NBC was to televise the Olympics, her research showed that GE owned NBC and was likely to profit from such an alliance.

She also put her club's investing acumen to work in another way. She believed in the longevity of the club's holdings of EMC Corp. (NYSE: EMC) so much that she sold half of her precious McDonald's shares to purchase EMC shares. The transaction also exposed the teenager to another lesson--capital gains taxes. She was not thrilled to have to pay the $65 tax on the McDonald's shares she sold.

Stock MarKids' members are not anxious about recent market downturns. "We're in it for the long run, so we're not worried," says Flythe, who agreed to start an investment club at the Stone Ridge School of the Sacred Heart in Bethesda, Maryland, where she is a junior. She says what matters most is that belonging to the investment club has taught her and the others "how to handle money."

Stock MarKids Holdings

Company                Exchange/Symbol   Portfolio Weighting

General Electric       (NYSE: GE)                40%
EMC Corp.              (Nasdaq: EMC)             22
Intel Corp.            (Nasdaq: INTC)            21
Cisco Systems          (Nasdaq: CSCO)             7
Money Market Account                             10