Focused On The Fundamentals

Preparation and education are essential to 20/20 Investment Club’s vision for success. For the past nine years, the Los Angeles-based, all-female group has followed a “Learn & Earn” strategy-educating themselves about the stock market before making any investments.

“The learning curve for the club’s members has been pretty steep,” says Sonya Weaver-Johnson, who founded 20/20 in 1997 with 13 members who each contributed a minimum of $25 per month. “From inception, we cultivated an educational environment by adopting the National Association of Investors Corp. (NAIC) education program,” she explains. “Those lessons became an integral part of our monthly gatherings, in which we studied everything from investment terminology to calculating P/E ratios. By working together, we analyze and evaluate stocks that will ultimately help us create a portfolio with a return of 15% compounded annually.”

A former day trader, Weaver-Johnson founded the club to share her stock market knowledge with other professional women. The goal was to help them bolster their retirement savings and achieve financial independence by 2020.

After forming the club, members visited libraries, studied books, and adopted the NAIC’s Education Program and Stock Selection Guide to learn basic investment terminology. They conducted in-depth research about the stock market and individual investments, memorized formulas, and learned to calculate earnings by hand. “We wanted everyone to understand where the numbers come from,” says Weaver-Johnson, who also invites financial advisers to speak to the group about industry trends, performance goal-setting, and investment strategies.

Following NAIC lesson plans, each member completed homework assignments and reported on stocks at monthly meetings until January 2000, when the club made its first purchase: 10 shares of Dell Computer. “We encourage 100% participation from members to increase overall understanding of the stock market,” adds financial partner Denise Reynaud.

Today, the 20/20 Investment Club uses NAIC’s Investor’s Toolkit software to evaluate stocks quickly and efficiently before they buy. The group ranked 11th in the annual Value Line Investment Club Performance contest held by NAIC. Based on earnings from May 1, 2004, through April 30, 2005, 20/20 had a rate of return of 7.77%-far outpacing the S&P 500 Index, which grew at a rate of 3.54%. The club also ranked among the 2005 BetterInvesting top performers in California, outperforming 73% of investment clubs in the state that year.

The club’s performance, however, has waned since the middle of 2005. Its portfolio, which is valued at $17,966, was up only 0.1% since inception as of Feb. 22. Although marriage, job transfers, promotions, and other life changes have caused members to leave 20/20’s ranks over the years, the club’s remaining seven members continue to pursue its goal of earning 15% annually.

Members make monthly contributions of $37.50 or more and meet bimonthly to make stock decisions. The club closely evaluates decisions to hold, buy, or sell based on keeping a balanced portfolio across industries. Despite recent declines, the group says it will continue to invest regularly in growth companies with stable histories that have produced favorable results. “You must invest in the market continually, no matter