It was earlier in the year that I wrote about whether investment clubs should be investors or traders. I strongly believe that clubs should be investors, and we recently seem to have proved that point in H&G.

The portfolio hadn't done too badly, and one of our members had tracked Vodafone (LSE: VOD) throughout the summer.

"It has moved within a trading range of 270-320p," he said, "so we should be able to nick four or five hundred quid when it gets near the top of the range and get back in again at the bottom."

We had not tried trading before, so we decided to give it a go. After all, Investment Clubs are for learning, right? And here was a golden chance to test a new strategy on the largest company on the FTSE. We agreed to purchase 2000 Vodafone shares, as co-incidentally at the August meeting VOD were near the bottom of the range. We sold Royal Bank of Scotland (LSE: RBOS) to do it, as we thought that it had hit a recent peak and we could always get back in later.

Well, sure enough, Vodafone started to creep back up. There was a bit of a sucker's rally at the beginning of September, and VOD touched 305 on the bid. However, this was still 15p short of the top of the range, so no decision was taken to sell.

The member who had been tracking them came back from his holidays the day after the peak. "Did we sell?" he asked. "No", I replied, "because it didn't get near 320". He said we would discuss it at the next meeting.

Since then of course, VOD has plumbed the depths, getting down to the 220's. At our last meeting, he re-stated what he thought we would have achieved and said that we should have sold at 305. "That would have netted us over £400" he said, and yes it would have done. The only problem was that although we had agreed on a range that VOD had traded within, we had not specified a set price. A slightly animated discussion then took place between the members. Our "trader" had said that we had missed the chance of making £400-500. Others requested that a price be set, as £400 equals one price and £500 equals another. It was mentioned that if we were not going to sell then there was no point in selling RBOS, as they had gone higher. The effect of this was exacerbated by the fact that VOD had gone lower still. A valid point was made that had we sold, we would still be no better off because we would have got back in again at 270-odd and would still be showing the same loss.

The discussion went round in circles for some time until someone finally stated that in a club that meets once a month, it was not reasonable to expect to "trade" and such practice should be confined to the individuals only, when they themselves make the decisions regarding what to buy and what to sell.

There was no minuted agreement, but I think everyone pretty much agreed.

In the 6 years that H&G has been in existence, that was the closest we have come to an argument about investing. The meeting ended well, and was actually very enjoyable, because in my opinion you learn more when there are differing views. But had we not all been friends it could have turned nasty. That sort of grief we can do without.

So, to conclude, I consider that it is best to let the individuals trade and the clubs invest. Less margin for error, less room for disagreement. It also goes to show how hard it is to pick the top and bottom.

Fool on!

Where Next?

• Investment Clubs discussion board
• The Fool's Guide to Investment Clubs
• Fool Books -- The Fool's Guide to Investment Clubs

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