Back in February of 2013 I started an investment club with 8 other buddies.  The idea was simple we would each put in $500 to start it up (creating an entity was the main expense) and then a monthly contribution of $100 thereafter.  I was worried about the longevity of the club at first, but after the first few rocky months everything has worked out fantastic.  Back in January I highlighted my investment club’s investment results:

  • Investment Gain for 2013 – 31.47%
  • Total Gain (with non-recurring start up costs) – 13.78%
  • S&P From 2/19/2013 to 12/31/2013 – 21.63% (when money was deposited)
  • S&P From 2/19/2013 to 12/31/2013 – 18.24% (our first trade)
  • We only closed out on 3 stocks (realizing the gains) – 119.57% ($367.49), 106.17% ($213.88) and 20.16% ($51.52)
  • Received $39.53 in dividends, but these weren’t reinvested in 2013 (will be in 2014 and beyond).

First and foremost, I am shocked this club is still in existence.  Yes, we have a few members who aren’t as “into” the market as I, and we have a few members who still can’t figure out how the facebook group board works (yes we are all in our 30s), but overall it has been a fantastic experience.  If we had started during a bear market I believe we would have formed to be something different.

I get two main benefits.  The first, is that I get to see different view points and learn about different topics.  These discussions have lead me to write about the differences between growth and value investors as well as teaching myself about advanced sales orders to protect profits.  The different view on the world brings me to the second benefit which is purely selfish.  I get to invest in stocks I would otherwise never touch if it wasn’t simply a one-ninth member.  I have said “yes” to stocks I would consider pure bets, solely, because I know I am not risking all that much of my money.  I am a conservative investor insofar as my main non-qualified investment portfolio is based on boring value metrics, so this provides a taste of something I’ll probably never be into fully with my own money.

Year to Date Investment Club Returns

I will get into a much more detailed analysis in January of 2015, but simply put:

  • Account Value on 12/31/2014 was $13,880
  • At close of market on 9/24/104 the account value was $22,342.
  • New money contributed was $8,100 (9 Members, $100/month, 9 Months)
  • Tax preparation paid $525
  • Account Value + New Money Contributed – Taxes = $21,455
  • So for all intent and purposes we are pretty flat year to date.  

This number is a little puzzling since have realized gains this year of $1,725 and unrealized gains of $1,319.  I have three non-mutually exclusive hypothesis.

  1. The first one is simple, I am calculating something wrong and someone should help me out!
  2. The second, all our built in unrealized gains was done last year and we are coasting.  This one is a little hard for me to believe since we have some stocks that are up way over 50%.
  3. Even though we have grown our assets the growth on our same risk taking ($750 to $1k chunks) means less to the portfolio.

Our January meeting should be interesting in terms of where we are taking the club.  Do we let new members in? Do we increase our lot purchases?  Do we create a speculate bucket vs a conservative bucket? Do we just continue since it seems to be working?