Invest Effectively

Investment Club

Our neighborhood in Florida has a weekly “Investment Club” that I went to this past Friday.  There were about 15 people gathered when I got there – in the events ballroom of our clubhouse.

We started by talking about our 2025 expectations for the stock market’s growth.  After two years of incredible growth (+23% in 2024, +24% in 2023), most people were expecting growth in the 0%-10% range, which I thought seemed reasonable.  The consensus estimate at the start of the year from analysts was a range from +7%-14%, with an average of +9%.

The topic of the week for the group was “Asset Allocation”.  Everyone was asked to share how their investment portfolio is allocated between equities, bonds, real estate and other investments.  I was honestly shocked at how differently people were managing their portfolios.  Overall, the group was highly focused on equities, with some as high as 100%.  Others were equity-averse, with stock holdings under 10%. 

Several people qualified their comments with, “I don’t want to be political, but …”.   Trump’s differing proposals on tariffs & taxes – and their potential impact on trade, inflation, and GDP growth – were a concern to most.  When people presented their asset allocation strategies, it was clear just how much people had used their differing world views to shape their portfolios.  Some will win with their beliefs, others will lose.

Our portfolio is shaped with cautious optimism.  I ran the numbers before the meeting: about 60% equities. 20% bonds/pension, 15% real estate (not including our primary home), and 5% cash.  I don’t really let my view of the current political environment affect how we invest.  Our investment horizon goes out much farther than the next 4 years.  Trump may succeed, Trump may fail – we’ll see if it impacts us financially in any big way.

Still, it was fun to hear about how people approach their investments.  There were some quite sophisticated investors in the group. I’ll definitely attend again. How about you?  Have you ever been a part of an investment club? Did it shape your investments?

Image: (c) MrFireStation.com

20 thoughts on “Investment Club”

  1. I have never been to an investment meeting. The closest I come to this type of activity is meeting with my three sons once per month to review where our investments stand and use a data service provider to screen for places invest new saving, redeploy cash for equities that have had a run up and are overvalued and sell equities where the financials have degraded. I am trying to help them avoid the mistakes I made when I was their age. There is an added benefit that if I become incapable of managing my investments myself, they will be able to help out.

    Last year we lagged the Market Weighted S&P 500, but one of my sons almost doubled other relatives returns who were recommending he use their professional manager who charges around 1.75%. YTD we are up almost double the S&P 500.

    My expectation for 2025 is that the Equal Weight S&P 500 that has lagged the Market Weighted S&P 500 over the past couple years will shine as both indexes revert to the mean. Most of the stocks in what most refer to as the S&P 500, which is really the Market Weighted Market Weighted S&P 500 have not done well over the past couple years. Most of the Market Weighted S&P 500 performance was driven by AI excitement for around a half dozen technology stocks. My prediction is that the Market Weighted S&P 500 Index will do worse and Equal Weighted S&P Index will do better as forgotten value stocks shine.

    I calculated my allocations at Equities are 83.86%, Fixed Income is 15.60% and Cash Equivalents are .55%. Equities includes real estate exposure via REITs. Fixed Income includes Tax Free Muni Closed End Funds, Junk Bond Closed End Funds, and Short Term Treasuries.

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    1. That’s a nice – and useful – activity to do with your boys. I bet my son would enjoy that. I sensed that a lot of the people at the Investment Club see investing as much as an entertaining game as much as anything. Some watch sports, some love movies – these folks love listening to analyst reports and earnings presentations. A pretty healthy and productive way to be entertained!

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      1. I agree that investing is a sort of treasure hunt game. However, if you buy the right kinds to stocks, very little trading is involved. Sometimes the best thing to do is nothing. That is probably one of the biggest lessons I am teaching my sons in our monthly meetings. At first they were expecting that we would come up with exciting new names every month. Instead we are looking at their holdings which are light enough that they can put more savings to work in.

        I don’t watch investment analysis on TV or the internet. I found a good data and analysis service which is much more efficient in terms of my time.

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  2. I also have never been to an investment club meeting other than discussing investments with roommates 40 years ago!

    The current split of investments outside of pension and condo which we live in is 73% Equities, 24% Fixed Income and the remainder Cash. The fixed income is in funds which include government and corporate bonds including some preferred securities which I count as fixed income due to the dividend.

    I moved my 457 account from my former employer last fall to my main broker, I waited to move it until I depleted my health savings account. Since the plan isn’t for ever using the proceeds other than RMD in a decade, I told my broker that I have a very long investment horizon and can stomach volatility. He placed it with a trader and as of today it returned 5.4% since invested December 24. Earlier this month it was up 9.3%. There is of course an added fee, but that is earned by the higher returns. In contrast the 457 was a low fee account but also a lower return.

    We have to remember that it isn’t the fee but the return.

    Assets = Options in Life.

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    1. We had some discussion about managed fund fees on Friday. The group was split between people who saw value in it and unmanaged index fund investors (like myself). I agree that it’s the return, not the fees that matter, but I’m probably not committed enough to devoting the time to oversight that I would need to consistently evaluate the performance of fund managers.

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      1. This IRA amounts to 9% of the investment portfolio so in my mind, if it went to zero no big deal, but it may just soar to become a larger portion of the portfolio.

        I don’t spend any additional time on it, my full service broker does that. By the way this is the same financial advisor that my father followed from two prior firms until he arrived where he is today. This is now a 35 year relationship with my parents and now my two siblings and me. Results and philosophy speak volumes.

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    2. You will most likely come out ahead financially rolling the 457 account into an IRA. My wife worked for several non-profit hospitals over the years and we found the annuity option they were offering worked out to around a 7% return for a sole survivor. The return was lower for the dual survivor option that covers both spouses. Either option didn’t provide any sort of legacy for our children. We rolled the funds into an IRA and have beat the annuity returns by a lot.

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      1. The 457 actually had decent investment options and the fee was low which was likely the selling point for government. Quite frankly in my last year of employment while chatting with members of the “Deferred Comp” Committee I was absolutely shocked as to the low level of knowledge of the committee members who encouraged people to sign up for the guaranteed return and target date funded programs. I even provided them with data but clearly, they did not understand principals of investing.

        What is interesting is that in the five years of drawing my PERS retirement, my payments exceed what the “cash value” of my retirement was at the time of retirement. Of course, the cash value is limited to individual contributions plus growth and does not include employer contributions and growth.

        Sadly, for participants in “retirement plans” of non-profits are annuity based, and the annuity providers are huge supporters of the local union parent. The products are “sold” based on security which is not secure for the long-term when inflation is considered. They play the fear of a loss of principle in one year over the opportunity of growth over the long-run.

        I could speak for hours concerning Human Resources staff having lack of knowledge of finance

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      2. I had similar experiences with HR and Management at several companies I worked for. One startup I worked at didn’t have a 401k in the 1986 timeframe and the HR person was too lazy to setup a plan. I took the initiative of calling several 401k providers and telling them we had around 50 people earning around $100K, which was a lot of money back then, and that we didn’t have a 401k plan and here is the contact information for the HR person. She soon started getting barraged by 401k providers calling her and dragging her into setting up a 401k plan. Ironically, she started touting the company’s 401k plan when recruiting.

        Another company I worked for had a horribly over priced plan provided by an Insurance Company. I actually heard the provider refuse to inform a participant what the fee structure was. I got myself assigned by the CEO to look into the fee structure. I benchmarked their S&P 500 Index fund and found that they were charging around 2.25%. There was also another compliance service that tacked on another 1% to do compliance reporting. I used to joke about high priced insurance companies offering all the risk of the stock market with all the return of the money market.

        Next, I started searching for cheaper 401k providers and found a 401k provider CEO who had just testified to Congress about the rip off high price insurance plan sponsored 401k plans and that the companies were not being proper fiduciaries. The story was on the cover of Forbes Magazine back when it was in its prime. I called the CEO of the company ironically called Employees Fiduciary and got a quote which was very low cost.

        I went to the CEO with my findings and he agreed to change plans. Next thing you know, all sort of Insurance Salespeople that he knew from the gym and golf course started showing up at our door and he didn’t want to be the bad guy to tell them to buzz of. I told him to assign me to handle this because I had no problem being the ‘bad’ guy. We got our low cost 401k with great fund elections.

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  3. Too many people interested in process such as setting up a plan and having meetings to explain the process and too few people actually interested in results.

    Hmm, these are the same people frightened by DOGE and Musk.

    By the way I am looking for a government grant and I will be competitive and only charge 40% overhead for my facilities and back office expense. I have to encourage the downtrodden to apply to my organization and train them when I hire them. No, I won’t participate in any sort of audit because organizations of my stature can be trusted, if you don’t believe me just ask any of my Board who are married to members of Congress!

    Sign me

    Not too cynical

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    2. I have always suspected that the Federal Government was robbing the rest of the country blind, as evidenced by six out of the ten wealthiest counties surrounding Washington D.C.. DOGE is already uncovering waste and fraud that is exceeding my expectations and I expect they are going to find much worse as they dig into the records.

      Ric Grinnell’s idea of California DOGE is another winner?

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      1. You may be convinced, but it looks like the house GOP has not been. They just passed their budget reconciliation with higher spending than ever. Why are they not listening?

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      3. … they are all RINOs? (Except Thomas Massie). That’s a big problem, then.

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      4. those member members of Congress, who voted for an increase in the budget are actually listening. The problem is they are listening to the wrong people. They are listening to big Pharma big ag big money, big defense. Those are the entities that elect these people the little person they do not care for K St. runs these people in the massive lobby, which includes former congress members

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      5. those member members of Congress, who voted for an increase in the budget are actually listening. The problem is they are listening to the wrong people. They are listening to big Pharma big ag big money, big defense. Those are the entities that elect these people the little person they do not care for K St. runs these people in the massive lobby, which includes former congress members

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  4. The late Vince Flynn, who was a Minneapolis based author wrote my favorite book of his titled “Term Limits” where the characters actually took on government officials who enrichened themselves at the country’s expense.

    “Politics and riveting suspense collide in this white-knuckled thriller from the #1 New York Times bestselling author of American Assassin—soon to be a major motion picture.

    In one bloody night, three of Washington’s most powerful politicians are executed with surgical precision. Their assassins then deliver a shocking ultimatum to the American government: set aside partisan politics and restore power to the people. No one, they warn, is out of their reach—not even the president. A joint FBI-CIA task force reveals the killers are elite military commandos, but no one knows exactly who they are or when they will strike next. Only Michael O’Rourke, a former US Marine and freshman congressman, holds a clue to the violence—a haunting incident in his own past with explosive implications for his country’s future.”

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