HED:The investment game
By Gary Perilloux
Lest anyone think stocks are the province of grim-faced investors seated in burgundy leather chairs under the glare of jade banker lamps, try this scene on for size.
It's noon in New Albany. More than a dozen men and women from 34 to 85 years old are gathered around a Western Sizzlin lunch table. And the topic is stocks, specifically Cisco Systems.
"I still don't know what they make," Lisa Reed, a 34-year-old stay-at-home mom tells her peers.
"That's dealing with technology," Blue Mountain resident Maedora Guyton says of Cisco.
"I think that's dealing with cooking oil," jokes New Albany accountant Jim Browning.
"OK ... Jim," Linda Mitchell chastises good-naturedly. Mitchell, a Mississippi State Extension Service coordinator, leads the New Albany group along with two dozen other Northeast Mississippi groups through the investment game regularly.
Tapping the popular interest in such investment phenomena as The Beardstown Ladies and the National Association of Investors Corp., the clubs joins serious financial research with old-fashioned fun and education.
"Most are investing around $25 (per person) a month," said Mitchell, coordinator of the Extension Service's Family and Youth Center based in Lee County. "It's not so much that it puts a strain on anybody, but it's enough to see some results when you put it all together."
"The philosophy of our club is to earn money, but it's also education," said Ruby Tate, a private piano teacher and recording secretary for the Tallahatchie Investment Club based in New Albany. "Linda has been so gracious. She's had some computer workshops and through her efforts and the cooperation of the Mississippi State Extension Service, it's helped us reach our goals."
This month, the New Albany group's portfolio topped $30,000 from ground zero three years ago.
Mitchell formed the New Albany club as a Union County home economist and now directs 24 clubs, including one club that votes on stocks and corresponds entirely through e-mail.
The Extension Service inaugurated investment clubs in Starkville and the concept has spread statewide with several dozen clubs.
Clubs typically commit to investing for two to five years and meet monthly.
"And then hopefully they will have earned enough to liquidate their assets and invest individually," Mitchell said. "Our goal is to cause more people to do as much investment planning as possible and to think about their future."
Such a goal was prominent in the minds of eight FMC Corp. employees who began meeting last month at their Tupelo workplace. Dubbed the Short-Timers, most are approaching retirement age and have upped the ante to a $50 monthly investment, twice the average for such clubs.
"I think the exposure to the stock market with various portfolios and getting together will bring a little bit of fun and maybe our own nest egg - who knows what we'll do," said Tony Schneider, 60, an FMC payroll accountant. "Primarily, of course, everyone has a goal to make some money. ... If I got into this club 10 years ago, I might have a nice little pot here."
That's exactly what's on the mind of Melissa Richardson, a 28-year-old FMC customer service representative who's in another investment club at the company, the Dough Rollers.
"I'm at the time of my life when I need to start planning ahead," Richardson said. "I'm expecting our first child and I'm already thinking about college costs in the year 2020.
"Working with a club enables more purchasing power and hopefully more returns. I'd like to turn a little profit and I know it will be greater than doing it by myself."
Richardson's new club voted to buy Microsoft as its first stock, a decision that has her concerned because of the federal government's antitrust case against the company.
In New Albany, investors are weighing the same concerns about the company's recently deflated market value.
"There's a lot of experts that feel like Microsoft divided into two companies would be worth more than Microsoft as one company," Browning advised.
"So maybe we should hold it," Reed replied.
"Oh yes, I would recommend that," Browning said. "It's the most widely held stock in the country."
The investors chose to hold their 13 shares of the computer behemoth worth $916.
But in a 6-5 vote with a few abstentions, the investors chose to make more shares of Nokia, a Finnish wireless communications leader, their latest investment.
New clubs often choose a relatively safe investment path at the outset, Mitchell said.
"One club bought Wal-Mart for the first three months," she said. "Wal-Mart has been the most often-bought first stock. Everybody thinks Wal-Mart is going to do great always. They think it's safe."
But interest is growing in technology stocks, Mitchell said.
A new FMC investment club, after approving its bylaws and pooling its first $1,000 recently, lived up to its High Flyers name.
One member voted to invest the first grand in Vulcan Technologies and two opted for Microsoft, but 10 members swung the decision in favor of Cisco Systems, a Nasdaq heavyweight that's racked up impressive earnings in building the bulk of the Internet backbone.
"I think out of the 24 clubs, 22 of them own Cisco," Mitchell said. "It's been one of the top-performing stocks."
Pam Thompson, a High Flyers member, said most employees take advantage of FMC stock options through payroll deduction. But she's ready to branch out with the investment club.
"It's just fun, really," the High Flyers club secretary said, "and a good learning curve to teach us how to buy stocks. And if we want to someday, we can invest on our own."
FMC officials encouraged employees to sign up for the investment clubs to build teamwork. Employees meet once a month on company time for about an hour.
Between meetings, members take assignments to investigate different stocks and industry sectors and report their research back to the group. Their input will include recent stock performance and analysts' recommendations for holding or selling the stock.
Highs and lows accompany the investment experience. On a tip, the New Albany club bought Pharmos, a maker of eye pharmaceuticals, and saw the stock peak at $15 a share. But before they could pull the trigger to sell, the stock declined to 4 1/32. They own 321 shares of Pharmos, but their 129 shares of American Online are worth nearly six times as much at $7,400.
Most of their research comes via the Internet, where they also mine other tidbits.
"I found the cutest site on the Internet," New Albany's Reed interjected at the Western Sizzlin meeting. "One hundred and one things you can do with the AOL discs they send you."
"Keep on the subject, Lisa."
"What CAN you do with them?"
"You can make a mobile out of them tie them together like mirrors on a little chain."
Later, while his wife Lois talked to another member about their butterbean crop, Robert McCrary grinned at the varied exchange of information at the meeting.
"We enjoy this because of the people," said the 83-year-old Myrtle resident and Memphis transit retiree. "We've met some mighty good people here."
Investments of the 3-year-old Tallahatchie Investment Club and their recent market value:
Company Shares Market value
AOL 238 $7,393
BellSouth 10 $461
Cisco Systems 28 $1,760
Dollar General 81 $1,378
Earthlink 170 $3,049
Goldman Sachs 35 $3,053
Home Depot 49 $2,496
Lucent Technologies 11 $687
Merck & Co. 5 $359
Microsoft 13 $916
Nokia 13 $754
Oracle 8 $640
Pharmos 321 $1,344
Qualcomm 5 $373
Union Planters 15 $489
WorldCom 55 $2,365
Wal-Mart 44 $2,559