Earlier this year I started an investment club with some friends. The idea was simple; each member would put in an initial $500 and an automatic $100 contribution every month.  After the first month I didn’t have very high hopes for the investment club’s survival.  It took us a few months but we finally hit our stride.

How We Operate our Investment Club

We are only 7 or so months deep and it took us a few heated exchanges to get here but what occurs:

  • One person will approach the group via a private facebook page with an investing idea.  That idea may be a particular company or a sector.  It is a sales approach (albeit to your partners but still trying to selling your idea) and should be treated as such.  Those that have just said, “I want to buy XYZ, inc” have been met with “no” votes pretty quickly.
  • That initial approach will include a purchase amount (usually between $500 and $1,000…but we have had as high as $2,000) and a possible exit strategy.
  • There are usually questions that go back and forth and during the exchange people will interject with Yes or No Votes.  With 9 members it takes 6 votes to get to an answer. A few times text messages had to go out to tell the person to check the facebook page.
  • We have used this technique for getting out of a position as well.

There have been multiple times where emails were sent out to give people the opportunity to be bought out of the partnership.  To date no one has taken the offer.

One of my favorite things is that (sans editing) everyone’s comments and feelings are memorialized! It makes it harder for someone to say, “I didn’t think that” or “That’s not what I said.”  Even better, Facebook will show that the person saw a particular message but then just didn’t say anything.

It is very interesting to watch the interaction between the partners.  For example, we have one partner who is a very good buddy of mine that believes that saying “I like X” in a thread not about that company is him offering something. His ideas often just die because he is not willing to do the work to get something approved.

Even without realized and unrealized gains $10,800 has gone collectively into the partnership.  I am not sure how long the partnership will go on, but at this point there is no reason to slow down!