It's what you have all been waiting for! Well, probably not, but we are going to do it anyway. Here at Fool HQ we have taken a deep breath and formed our own investment club. Not only that, but we have decided to publish the minutes and results on the site for all to see. We have not yet decided whether this is a) incredibly brave or b) incredibly stupid. As with all investing, only time will tell.
This article is merely an introduction covering the club's beginnings and its first monthly meeting, which took place in early August. In a couple of weeks we will bring you the edited highlights of the second meeting, which was mostly a discussion about our investment strategy. Our first purchase (assuming we can agree on something) will be made in mid-October. Many Fools are spending every waking hour shifting through potential candidates. At last we'll find the answer the age-old question "how many Fools does it take to devise a successful portfolio?"
Although we want the club to do well, we also want to make it as educational as possible. A large element of these articles will focus on how the club is run, rather than concentrating on the individual investments. This is also a useful get-out clause if performance turns out to be less than sparkling.
Let's start right at the beginning. How do you form an investment club? It's quite simple really. As a first step, we contacted ProShare and ordered their excellent manual, costing £29.50, that tells you how to set up and run an investment club. You can order your copy from ProShare's website. Or if you still prefer the steam-driven approach, contact them at:
ProShare Investment Clubs
Library Chambers
13 & 14 Basinghall Street
London EC2V 5HU
Tel: 0171 600 0984
Step two was finding out who wanted to join. A quick e-mail around the office was sufficient for our purposes. About three-quarters of the UK Fools decided to put their money where their mouths are. The remainder provided some pretty reasonable excuses, some of them highly imaginative.
We think that the membership of our club is going to be unusual in three ways. Firstly, we have a high proportion who know (or at least think they know) a fair bit about investing. Most other clubs that we have come across tend to have just one or two members who have experience with investments. What effect this will have remains to be seen. Early thoughts are there could be some interesting clashes between the proponents of our growth, value and mechanical strategies. No doubt the Rule Shakers will stir up the pot as well.
Secondly, we are almost up to the maximum of 20 people already. This limit comes from the laws relating to partnerships, which the vast majority of investment clubs are legally defined as. Many clubs start with just a few people and grow over time. Perhaps we will have to perform some financial engineering and de-merge into Club I and Club II in due course?
Lastly, the club includes some of our remote Fools, such as TMFYvonne and TMFJenko, who may not be able to attend many of the meetings at all. But this is less of a problem these days due to the wonders of e-mail and conference calling.
Having gathered enough interest for the project, we set a date for the first meeting. TMF Essex, being highly skilled in such matters, volunteered to draw up an agenda and take the chair for the inaugural meeting.
They key items discussed at the first meeting were:
1. The appointments of ChairFool, Secretary and Treasurer;
2. The constitution;
3. The name of the club;
4. Subscription arrangements; and
5. The selection of stockbrokers and banks.
If you want to see the detail of these discussions and our decisions, see below for minutes for the meeting. Much to the disappointment of some of our members we settled on the inspired title of 'The Motley Fool Investment Club' as the name for our endeavour. To save on pixels we'll shorten this to TMFIC.
If you are thinking about setting up a club yourself, don't be worried about having to draw up a constitution. The ProShare manual provides a pro forma that you can use. We have adopted this with one minor variation. In accordance with our normal trading rules, the club will not deal in the five days following the discussion of a share on the site.
So that's it. We are off and running and it was all remarkably simple. If you have any comments about this piece, or indeed TMFIC itself, please post them to the Investment Clubs message board -- a dedicated message board for discussion of the Fool club itself is planned soon.
The Motley Fool Investment Club
Inaugural Meeting
Minutes
Date: Friday 6th August
Time: 3pm
Location: Room 6, 79 Baker St
Present: TMF Googly, TMF Sorted, TMF Essex, TMF Tiger, TMF Grow, TMF Exile, TMF Popper, TMF Berlin, Ewan (our IT guru), TMF Jenko (via telephone link-up to the Channel Islands). (Who are these Fools?)
AGENDA
1. Apologies for absence
These were received from TMFPyad, TMF Yvonne, TMF Toby, TMF Alan and TMF Ciao.
Election of Officers
2.1 Hon Chairman
Nominations were: TMF Essex; Warren Buffet; Peter Lynch; Robert Maxwell
Robert Maxwell, Warren Buffet and TMF Essex all received three votes each. However, remembering that the main beneficiary of the Mirror's pension fund was now dead made Robert Maxwell's votes invalid. It was proposed to ask the Sage of Omaha to fulfil this arduous role. Failing this, TMF Essex agreed to act as the club's figurehead.
2.2 Hon Treasurer
Nominations were: TMF Tiger; Jonathan Aitken; Nick Leeson;
Again, all three nominees each received three votes. However, it was thought Jonathan Aitken might have trouble doing the books from inside jail. Nick Leeson was deemed too Wise, leaving TMF Tiger to pick up the burden.
2.3 Hon Secretary
Nominations were: TMF Eagle; Jeffrey Archer; Boris Yeltsin
Boris Yeltsin received four votes. Jeffrey Archer got none and TMF Eagle scraped four votes as well. However, it was agreed after breath tests were administered that the Russian President was incapable of looking after his own government let alone the esteemed affairs of this investment club. This left TMF Eagle in the lurch to pick up this onerous task.
Adoption of club constitution & rules
In addition to the rules already circulated it was agreed to include the standard Motley Fool Trading Rules in the club's extensive rules book. These include the principle of not executing trades within five days of discussing particular shares.
3.1 Choose name of club
Initial suggestions were:
Short - Term Capital Management
Ten-baggers Inc
Polybust
Bank of Clowns & Criminals
The Motley Fool Investment Club
The Sherlock Holmes Investment Club
Buy a Better Barge Investment Club
Ned Kelly & Friends
In addition Crufts and the Baker Street Boys / Irregulars were suggested as well.
Crufts received 2 votes. The Baker Street Boys / Irregulars and the Sherlock Holmes Investment Club both received one vote each. The Motley Fool Investment Club, despite the other glittering titles on display, received six votes. No others were voted for at all. Consequently the club will officially be called the Motley Fool Investment Club.
Fix Subscription arrangements
4.1 Initial lump-sum
Suggestions for initial contribution were:
£50
£100
£25
There were 7 votes for £50 initially, 3 votes for £100 and 2 people wanted to pay £25 at first. Thus it was agreed to contribute £50 initially.
4.2Monthly subscription
Suggestions for monthly contributions were:
One shekel
£10
£20
£15
£25
£14.67
One can of beer (empty)
3 euros
7 people voted to contribute £25 per month. One vote was received for one shekel, £15 and £14.67 respectively. No other sums received any votes. Thus £25 will be the monthly subscription.
Appointment of Stockbroker
TMF Grow agreed to do research into which stockbroker the club should use. It was decided that an Internet service was preferable, and of course charges should be the main concern.
Appointment of Bank
TMF Tiger agreed to find the bank providing the best deal for investment clubs and report back at the next meeting.
Membership
The club constitution states that it is allowed a maximum of 20 members, and 17 had already expressed an interest in joining.
It was agreed to invite the following 3 potential members, who were not present, to join as well:
David Berger (TMF Fool UK)
James Kraft (TMF Jam)
Keith Milner (TMF Keith)
Investment Policy
The following were suggested as possible investment styles:
Long term buy and forget
Short term buy and keep remembering how bad it was
Nothing TMF Googly recommends
Any share that goes up
Any golf share
Any Internet share
Any share beginning with K and with a Chairman whose birthday falls in a month with an R in it
The brewery that owns the pub we meet in.
Given the choices on offer, it was decided to ditch all of the above and make the investment style the main focus of the second meeting.
9. Invited speakers
Initial suggestions for possible speakers were:
Nick Leeson
Anthony Bolton (Fidelity fund manager)
Jayesh Manek
James Dyson
Chris Evans (the biotech guy not the disc jockey!)
10. Any Other Business
People thought it would be good to have the date of a regular meeting agreed, so that members could post contributions when they knew they could not attend in person. To this end the first Wednesday in each month at 1pm was suggested so as to coincide with the Foolish social meeting on that evening. This would allow remote Fools to kill two London events with one stone by attending just one trip.
11.Date of Next Meeting
Following on from point 10, this was set for Wednesday 1st September at 1pm.
Fool USA