Next week up to two dozen people will gather at Killary Lodge in Leenane, Co Galway, for two days of intensive instruction and discussion about investing in the stock market. Each one of them has paid more than £500 to hear a trio of British consultants reveal how to set up an investment club a phenomenon in Britain and has only just started happening here.
The Irish seminar the first of its kind is the brainchild of Mr Dennis Noble, a retired civil servant from Newtownabbey in Northern Ireland who attended a finance course in Hawaii last year which was run by a US motivation guru, Mr Anthony Robbins. There, he met another British group which was inspired to set up and organise investment club seminars and workshops in Britain.
Mr Noble, who with a group of friends in the North, has set up the first GIG (Guru Investment Group) Irish investment club, arranged for the consultants to hold a number of "Money Talks" evenings in Dublin, Cork, Limerick and Galway this spring. It was from these talks, which discussed the motivation behind sharing the risks, rewards and work involved in stock-market investing, that the members of the group, who are attending the Galway weekend seminar, were recruited.
"The idea behind investment clubs is to make some money, but also to have a lot of fun," says Mr Noble.
Unlike the very informal investment clubs which have been set up and have been already written about here, the GIG equivalents are arranged on a much more formal basis, with proper rules and a constitution.
The investment system they use was originally devised for investment clubs in the US and "doesn't rely on tips or hunches about a certain stock", but instead provides the members with a computer software programme which can help them quickly assess the merits and prospects of the particular stock and the company it represents. From there, they can decide how much to invest and for how long. Clear strategies are formulated and then stuck to for the designated period.
Judging by next weekend's schedule, the prospective members of the new investment clubs should have a pretty good idea by Sunday night of what they're letting themselves in for: between 7.30 p.m. on Friday and 6 p.m. Sunday, members of the group will start by examining their own money goals, their existing financial positions and the meaning of financial security, independence and freedom.
From there they learn about asset allocation, investment options and risk; long-term buy and hold strategies; the power of compounding; momentum trading as well as the rules of "buying calls", "buying puts" and "covered calls". They will discover how stock splits work, how to avoid losses and finally, the fundamentals of setting up and operating an investment club.
According to Mr Noble, most investment clubs (and there are now thought to be several thousand in Britain alone) have about 10-12 members (20 is the recommended upper limit) who invest no more than about £50 a month each. (Affiliation fees to the GIG group is approximately £10 per annum per club member.)
They meet once a month for a couple of hours and each member usually spends a few more hours a month completing some task such as research, mainly using the financial press and the Internet, or on some aspect of the club's administration.
After a few months, the club is usually ready to choose a stock. According to Mr Noble, the GIG affiliated clubs are mainly investing in US stocks; the buy orders, usually of a couple of thousand pounds are made through lowcost, execution-only stockbrokers. (Sharelink, based in London, is one such company and provides a freephone number during normal working hours. After-hours calls are put directly to its US dealing desks.)
Investment clubs are attracting people from all walks of life and the interested Irish punters are no different, says Mr Noble. Some work in regular jobs such as teaching, sales, computers; others are retired people or homemakers. He mentions how the GIG founders were inspired by one of the earliest investment clubs in the US, a group of middle-aged and elderly women known as the Beardstown Ladies, who are famous in US investment circles because of their reputation for beating professional investors and the fortune they have made from their modest investments.
(The GIG advisers do temper enthusiasm, says Mr Noble, by emphasising that personal finances pensions, life and health insurance, savings, etc need to be in order before you start investing any spare cash in shares.) The clubs provide a great chance to make new friends and to put personal knowledge and skills to good use, he says, but the real purpose of the club is to make money.
"The reason why many of us have not got properly involved in investing is that we know people who have lost money or we have ourselves." But, by learning the basics of investing and using the same sort of strategies that successful punters have used to get rich, much of the fear of investing should disappear, he says.
The GIG group of investment clubs has worked out proper reporting arrangements with the British revenue authority and is investigating what the Revenue Commissioners here might require of such investment partnership. It has also worked out a proper constitution for the clubs, with club officers, each of whom has particular responsibilities. Careful records must also be kept as well as treasury accounts, etc.
Part of the imported system used by the GIG group, led by a British email consultant, Mr Babu Shah, who with his wife and some friends had also attended the Anthony Robbins seminar in the US, puts considerable emphasis on developing a group dynamic and in building teamwork. The three-day seminar incorporates some physical, orienteering activities to get people to work together if nothing else it should help to clear a few heads that may have become overwhelmed by all the technical jargon so beloved of the investment industry.
There are no immediate plans to hold another weekend seminar here in the Republic, but Mr Noble told Family Money that he will pass on information about any future GIG "Money Talks" or seminars here or in Britain to interested parties who contact him at 0801232 866970 or by Fax: 0801232 860850.
