Volatility happens.How investment clubs are dealing with turbulent markets With 100-point rises and falls Rise and Fall redirects here. For the Belgian hardcore band, click here. Rises and falls is a category of the ballroom dance technique that refers to rises and falls of the body of a dancer achieved through actions of knees and feet (ankles). in the Dow Jones industrial average Dow Jones Industrial Average The best known U.S. index of stocks. A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange. an almost commonplace event, some jittery investors are tempted to sell their holdings at the slightest sign of trouble. And as more mom-and-pop investors turn to electronic trading, if a stock fails to meet earnings estimates by one penny, a sell order is just a mouse click away. But despite the frenetic pace of today's stock market, some investment clubs are sticking to a buy-and-hold investment philosophy, hanging on to their stocks even when other investors are screaming "Sell!" Others are putting more of their capital into riskier investments they hope will become long-term winners. The New Freedom Investment Club, based in Durham, North Carolina Durham is a city in the U.S. state of North Carolina. It is the county seat of Durham CountyGR6 and is the fourth-largest city in the state by population. , adheres to the former principle. The 21-member club has 100% of its $214,000 portfolio invested in stocks, according to presiding president Chris Wilson, and typically holds them at least three years. "We add [stocks] with the idea that we will hold them for a long period of time," says Wilson. The club uses a number of tools to research potential and current holdings, including Yahoo! Finance, Value Line reports and the Securities and Exchange Commission's EDGAR Edgar or Eadgar (both: ĕd`gər), 943?–975, king of the English (959–75), son of Edmund, king of Wessex. In 957 the Mercians and Northumbrians rebelled against Edgar's brother Edwy and chose Edgar as their king. on-line database. Wilson adds the club won't invest in a stock unless it has at least a five-year history. Since Internet stocks don't fit that criteria, New Freedom shies shies 1 v. Third person singular present tense of shy1. n. Plural of shy1. away from the sector. Although Wilson understands the club can realize enormous gains by investing in Internet firms, it prefers to own more stable players in the industry, such as Lucent Technologies (NYSE NYSE See: New York Stock Exchange : LU), its No. 2 holding at 14%, and Cisco Systems (Nasdaq: CSCO CSCO Cisco Systems Incorporated (stock symbol) CSCO Chief Supply Chain Officer ), its No. 6 holding, at 6%. The club does dump some stocks to make room for what it deems are more attractive investments. For example, in April, the club dropped Memphis-based AutoZone (NYSE: AZO), a specialty retailer of auto and truck parts, and picked up CVS (1) (Concurrent Versions System) A version control system for Unix that was initially developed as a series of shell scripts in the mid-1980s. CVS maintains the changes between one source code version and another and stores all the changes in one file. Corp. (NYSE: CVS), a Woonsocket, Rhode Island
Then there's Enterprising Minority Investors, a Hartford, Connecticut, investment club founded by husband and wife Andre and Medina Jett. Formed in 1991 to help young professional African Americans invest in the market, the club follows former Fidelity Investments fund manager Peter Lynch's credo: own what you know. To that end, the club recently invested 15% of its $104,000 portfolio in a private placement for Ball Girl Inc., a minority-owned woman's sports apparel company in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . Andre has a working relationship with the management at the firm, so he was comfortable taking a position via a private placement. Still, Andre acknowledges that Enterprising Minority Investors' stake in Ball Girl is a departure from its more measured approach to the market. The club also has a big position in Citigroup (NYSE: C), with 27.2% of the portfolio invested in the New York City financial services powerhouse. Enterprising Minority Investors bought its first shares when the company was Travelers Group, at an initial cost of roughly $3,000, before it merged with the former Citicorp. The club now owns 600 shares worth $26,000. After Ball Girl, its next largest holdings are Santa Clara, California-based semiconductor maker Intel (Nasdaq: INTC), at 11.4%, and San Francisco-based retail apparel chain Gap (NYSE: GPS), at 9%. "Though the club keeps an active watch on its investments, members aren't so closely tied to the market that if [Alan] Greenspan sneezes, it sends off bells and whistles A slang English term for exceptional features in some product. In the computer field, it typically refers to functions in software that may be greatly appreciated by some users, even though they may not be necessary most of the time. ," he says.
Out on a Limb
The Enterprising Minority Investors investment club in Hartford,
Connecticut, has big stakes in women's sporting goods and
apparel; financial services; and technology. Here are the club's
top four holdings:
Company Exchange: Stake Business
Symbol
Citigroup NYSE: C 27.2% Financial services firm
Ball Girl N/A 15(*) Women's sporting goods and
apparel
Intel Nasdaq: INTC 11.4 Semiconductor manufacturer
Gap NYSE: GPS 9 Retail apparel chain
(*) Invested in a private placement.3 |
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