Any accountant can tell you that when dealing with financial matters, it’s important to rely on fundamental principles in order to achieve success. The members of Awareness To Action Investments (ATAI), a San Francisco Bay Area investment club made up mostly of accountants, are using their knowledge of financial analysis to devise a system of researching stocks they hope will help them increase their collective wealth.
The group was formed in April 2000 after the members attended a seminar sponsored by Charles Schwab that was intended to teach the fundamentals of investing. The original 13 members of the club each put in $100 as an initial investment and voted to take on a name that reflected their new understanding of the importance of investing. “We wanted to take the information we learned there, which improved our awareness of investments, and put it into action,” says ATAI treasurer Okorie Ramsey, explaining how the club got its name.
Ramsey, who had participated in an investment club before, filed the necessary paperwork to establish the club’s business name and charter, created the bylaws, and opened a trading account with E-trade. The group meets on the first Saturday of each month, and its current 11 members, who range in age from their mid-20s to mid-40s, average a monthly contribution of $100 (but members can contribute the minimum $25 a month).
ATAI president Patrice Fort says the club’s main goals are to make sure members are educated about how to invest for their future, to educate others about investing, and to grow each member’s personal investment portfolio. To reach those goals, Fort tries to keep the group consistently involved in research and unwavering in their approach to picking stocks. “I try to keep everyone involved with our ‘adopt-a-stock’ program, where members take a stock in our portfolio and consistently research and report what’s going on with it each month,” she says.
When researching stocks, Ramsey says, “we pretty much follow the National Association of Investors Corp. formula — we select stocks that have 15% to 20% growth in revenues and earnings-per-share over the last five years.” The group uses the NAIC’s stock checklist and stock selection guide to understand how key stock indicators and the historical share price can help determine winning investments. With the stock selection guide, “you can input the revenues, dividends, and stock prices for the last 10 years to track what the historical performance has been, then you can determine what the future growth might be,” Ramsey says.
After analyzing the future potential of several selections, the group develops its “price watch list” of buy, sell, and hold price ranges for the stocks they currently own and those they may purchase in the future.
Since the group was established just as the recent bear market began in 2000, several of their selections have lost value. As of April 30, ATAI had an account balance of $11,452.80, which represents a 22% loss since inception. The group is willing to ride out this difficult period in the market because