Page 57 - merged.pdf

•Five Greatest Ways of Winning in the Stock Market 37

During an inaugural meeting a number of significant issues are discussed and
decisions made in the following areas:

• Office bearers. The club needs a chairman, a secretary and a treasurer. The
treasurer is highly significant in the club as he or she will keep the records of
the portfolio and all transactions.

• Number of meetings per year. Some clubs meet monthly and others less often. It
depends on the subscription income and, to some extent, on the social aspects
of the club. Some clubs are primarily social and will meet frequently to socialise
as well as make investment decisions. Others are more serious in terms of the
objectives of the club and the likely level of the fund as it grows. In any case
there will be an annual general meeting.

• How members are elected. Probably new members will be proposed by existing
members and their invitation to join ratified at a monthly meeting.

• Subscriptions. The members must decide on the amount of the joining fee, the
upper and lower limits of monthly subscription, and upper and lower limits on
lump sum investments. I have seen clubs with monthly subscriptions as low as
£20. The average for our club is about £95 per month, with the lowest sub
£50 and the highest £250.

The rules also need to be clear on how the portfolio is valued for purposes of buying
units in the fund, or selling units back in order for a member to realise some or all of
his or her holding. Normally this valuation is made on the last day of the month and
the price used is the mid-price of each share as quoted in the Financial Times.

Members of an investment club need to have a common goal for the building
up of the portfolio. Individual reasons for being in the club may be very different,
but the investment goal needs to have the support of everyone. It is probably useful
to set it fairly wide. Taking that goal into account, individuals can then calculate an
appropriate subscription amount.

The investment strategy is the next important step. This should certainly in-
clude the level of risk to be taken. The members must agree what proportion of