Setting up an Investment Club

friendface

I was just thinking about the potential for setting up an investment club at NUIG. I don't believe any investment club currently exists at the college, to my knowledge anyway. I know it's something that's been done at other universities, I'm not sure about Ireland but a quick google search for 'college investment club' brings up plenty results.

Is there any reason such a club doesn't already exist. I thought there may be some rule against clubs gathering money for trading or gambling. Just a guess.

Anyway, I thought it could potentially be a great idea for people interested in investing to get together and share knowledge and ideas. In addition, I would envisage setting up a group portfolio where members could pay in a monthly subscription (voluntarily). We could then research potential investments and vote on which stocks to invest in.

There are many advantages to investing as a group over investing individually. Firstly, depending on the number of subscribers, it opens up the potential to purchase stocks which may be out of reach of an solo investor due to prohibitive cost. Members would be able to contribute personal knowledge to the group depending on their background. It's also more fun to discuss investing with others who are interested.

I don't have much investment experience nor do I come from a business/economics background. Also, I think it should be made clear that money invested is not guaranteed to make a profit or even be returned in full. I would see this initially as a small-stakes investment club which would help members build their knowledge of stock market trading and analysing business fundamentals.

Does this idea interest anyone here? I'm really just looking for feedback and comments. Does anyone have experience in setting up clubs at the college? I'd see this as being a fairly small club with maybe 15-20 members. I don't think it would work very well if there was too large a group. I don't even know if that many people would be interested in joining.

Sorry my post is a bit scattered, the idea was just floating around my head in bed here so I thought I'd post it up.

apoch632

friendface wrote: »

I was just thinking about the potential for setting up an investment club at NUIG. I don't believe any investment club currently exists at the college, to my knowledge anyway. I know it's something that's been done at other universities, I'm not sure about Ireland but a quick google search for 'college investment club' brings up plenty results.

Is there any reason such a club doesn't already exist. I thought there may be some rule against clubs gathering money for trading or gambling. Just a guess.

Anyway, I thought it could potentially be a great idea for people interested in investing to get together and share knowledge and ideas. In addition, I would envisage setting up a group portfolio where members could pay in a monthly subscription (voluntarily). We could then research potential investments and vote on which stocks to invest in.

There are many advantages to investing as a group over investing individually. Firstly, depending on the number of subscribers, it opens up the potential to purchase stocks which may be out of reach of an solo investor due to prohibitive cost. Members would be able to contribute personal knowledge to the group depending on their background. It's also more fun to discuss investing with others who are interested.

I don't have much investment experience nor do I come from a business/economics background. Also, I think it should be made clear that money invested is not guaranteed to make a profit or even be returned in full. I would see this initially as a small-stakes investment club which would help members build their knowledge of stock market trading and analysing business fundamentals.

Does this idea interest anyone here? I'm really just looking for feedback and comments. Does anyone have experience in setting up clubs at the college? I'd see this as being a fairly small club with maybe 15-20 members. I don't think it would work very well if there was too large a group. I don't even know if that many people would be interested in joining.

Sorry my post is a bit scattered, the idea was just floating around my head in bed here so I thought I'd post it up.

Try contacting BizSoc maybe. They might have something like this

Ficheall

I wouldn't touch such a group with a barge-pole. Allowing students to have any say in what happens to my money? I think not...

friendface

Ficheall wrote: »

I wouldn't touch such a group with a barge-pole. Allowing students to have any say in what happens to my money? I think not...

I think you've missed the point completely Ficheall. Either that or I've missed the joke. The point of an investment club such as this would primarily be for members who are interested in investments to gain experience without the cost and added risk of investing individually. It would allow a small group of people to learn from each other and share knowledge.

This is not a group that would look for outside investment. I'm not talking about selling shares in a student managed fund. This is completely a voluntary group with the option for members to make a small monthly financial contribution (maybe €10-€15) to build up a fund with which the group can purchase shares. Decisions on which shares are purchased would be made by the group as a whole on the basis of a unit-stake voting system.

Also, in case you didn't realise, students do also have the right to vote. So I guess that means that we indirectly have a say on what happens to your money :eek: :pac:

Ficheall

So the idea is that I put 100 euro of my money into this 'group', whence some students, including myself, vote that it should be invested in fund X, no?

friendface

Ficheall wrote: »

So the idea is that I put 100 euro of my money into this 'group', whence some students, including myself, vote that it should be invested in fund X, no?

Yes, pretty much. That is those who have invested in the group fund would have a vote. What I was trying to stress to you though is that the financial aspect would be minimal and the contribution would be kept as small as possible. This is not a new idea and it appears to have been a success at other universities across the states. There was also a club recently founded in Trinity which I believe was the first of its kind in this country. (http://trinitysmf.com/)

Also, this would be for those genuinely interested in learning about investment and gaining some experience. You give the impression that it would be akin to a bunch of students pooling their grant money and voting on which horse to bet it on.

Obviously a voting system would be developed whereby those who have invested more would have a greater say. Also, it could be decided that everyone must invest equally thus giving equal voting power. Also, the fund would not be invested entirely on just one equity. The goal would be to research a diverse range of shares in companies from different sectors of the economy and build up a diverse portfolio over time. Students in different faculties would each bring their own knowledge and perspective to the group and would thus help to inform research and decision-making.

Ficheall

The financial aspect being minimal is surely akin to playing poker for matchsticks, no? Sure, it can be a little fun, but in no way represents how people would act if there were actual money on the line.

It sounds very much like students pooling their money and betting on a horse. My degree was in Financial Maths and Economics though, and many of the class, many of whom went on to work in fund management and investing in stocks etc, fancied a regular flutter. I see little difference between the two.

What could this fund group do for me, were I to join, that I could not do myself?

friendface

In terms of the financial aspect being minimal, this would be to allow people to learn about trading and gain experience without the worry of losing a significant amount of money. I wouldn't agree that people are going to act completely different or be reckless with their investment just because it is a small stake though. With a decent sized group, it would be possible to raise a decent investment fund in a relatively short space of time and would give stakeholders the option of investing in an array of shares which would likely not be possible to do individually due to financial constraints. That would be one of the advantages of investing as a group. The ability to construct a diversified share portfolio at lesser cost as you are sharing a stake in each shareholding with other members of the group. If you were to purchase shares as an individual the trading costs and commission may make it not worth it and it would take a much larger individual investment to diversify your portfolio which would not be possible for most students who are not earning a full-time salary.

Say for example, we had a group of just 10 people who agreed to invest say €20 each per month. After 6 months, there's €1200 set aside for share purchase for an individual contribution of just €120. This would allow for the purchase of a much larger number and more diverse shares than that member could have managed individually.

I just found a decent brochure produced by the Irish Stock Exchange which explains the idea pretty well I think: http://www.iol.ie/~chancersic/PDF%20information/ISE_Investment_Clubs%20brochure.pdf

The are a number of advantages to joining an investment club:

• As I've mentioned above, the relative costs of trading and risks associated are significantly lower than for an individual investor
• Members would be able to dedicate their time to researching particular sectors and companies and relay this information back to the group. By pooling this information, it saves time compared to working alone.
• Easier diversification of portfolio due to lower relative cost - as I've said above
• Provides a forum for debate on investment choices enabling members to gain from the knowledge and experience of other group members

In this regard, I thought it would be more suited to students moreso than working professionals for a few few reasons:

1. Students would have less disposable Income - Individual share investment would probably not be an option
2. Time Constraints - With lectures and exams students would not want to put a large share of their time into researching trading and gathering information on various companies - by pooling time and research everyone benifits by making more informed decisions
3. Lack of Experience - Most members probably would not have much (or even any) investment experience. Therefore, a group such as this gives people a safer environment in which to learn without significant costs or risk

lopppy

I think this is a great idea. I'm pretty sure nothing like it exists in BizSoc. Your right in saying it's not viable for most students to buy shares in a company because of the costs associated, and online financial spread betting can be quite risky but this is something that a club could educate itself about.

Can clubs get sponsorship? I'm more familiar with societies, BizSoc are sponsored by KPMG and recently the Accountancy and Finance society are working with Deloitte, these companys employ a lot of students so they're attracted by the exposure they get.

So I'm saying it could be possible to get a sponsor (eg Paddy Power, they've a big financial spread betting operation in Ireland and employ a reasonable amount of people). This sponsorship could be used to fund tutorials and seminars to students on sharetrading and possibly and annual trip away to somewhere like the London Stock Exchange.

Fionn MacCool

Sensible gambing (covering bets etc) isn't much different to trading on the stock market. In fact it's probably safer.

Anyway, I can't think of a snootier, more D4 sounding soc than an Investment Club. Maybe ye could have a fundraiser with YFG and the rugby team :P

friendface

Fionn MacCool wrote: »

Sensible gambing (covering bets etc) isn't much different to trading on the stock market. In fact it's probably safer.

Anyway, I can't think of a snootier, more D4 sounding soc than an Investment Club. Maybe ye could have a fundraiser with YFG and the rugby team :P

Judging from the posts here, there seems to be a bit of negative opinion surrounding the idea of an investment club.

Firstly, in relation to your point about 'sensible gambling' being safer, I wouldn't agree with this at all. There is risk attached to both gambling and stock market trading but that is where the similarities end. Gambling is no way to secure long-term financial profit. At the end of the day, gambling is more down to luck and chance than skill.

At least when you are investing in stocks, you are investing in a tangible business. By investing in a range of stocks across a diverse portfolio, you can minimize risk. Even if there is a dramatic fall in stock prices, you do not lose your stake as you do when placing a bet. Unless the business goes into liquidation, you still have a stake in the business and may recover your losses when the market recovers.

If anyone is interested in an investment club, send me a pm or just post here. I've given a lot of details about how such a club would work and what the aims would be. Like I've said, it's not so much a money making venture, but more of an opportunity to learn about investments.

bildo

Untrue, if you're clever enough and have a lot of time to waste gambling can be a sure winner. You just have to use multiple bookies who offer varying odds, large sums of cash and be good with a calculator.

friendface

bildo wrote: »

Untrue, if you're clever enough and have a lot of time to waste gambling can be a sure winner. You just have to use multiple bookies who offer varying odds, large sums of cash and be good with a calculator.

I know you're talking about betting arbitrage in which case it's possible to back two outcomes for sure profit. The above post just highlighted 'sensible gambling' and cutting your losses. The system you're talking about is not as simple as it sounds though and comes with greater potential risks. Arbitrage opportunities may only present themselves for a short time window before betting activity erodes any profit making ability. There's also the risk of one of your bets not being accepted or bet cancellation. Then, one has to be careful that both bets are processed at nearly the same time at the correct odds to ensure profit. Finding an arbitrage opportunity is difficult enough and executing it correctly adds greater risk.

I'm not going to start an argument about gambling vs investing here anyway so that's the last I'm going to say on the subject. If there are people seriously interested in investments, reply here. Otherwise, please don't take this thread off-topic.

brianthebard

getting back to the topic I believe nuim has an economics club that does what you are looking for op, maybe give them an email for some info on what they do and how they got set up.

Ficheall

friendface wrote: »

Gambling is no way to secure long-term financial profit.

No less so than investing.

friendface wrote: »

At the end of the day, gambling is more down to luck and chance than skill.

No more so than investing.

friendface wrote: »

By investing in a range of stocks across a diverse portfolio, you can minimize risk.

and profit.

friendface wrote: »

Even if there is a dramatic fall in stock prices, you do not lose your stake as you do when placing a bet. Unless the business goes into liquidation, you still have a stake in the business and may recover your losses when the market recovers.
...
it's not so much a money making venture, but more of an opportunity to learn about investments.

See - theoretically it could be an interesting area to get involved in, but such blatant dishonesty, even in this setting, would discourage me from joining such a 'club'.

friendface

Ficheall wrote: »

No less so than investing.

No more so than investing.

and profit.



See - theoretically it could be an interesting area to get involved in, but such blatant dishonesty, even in this setting, would discourage me from joining such a 'club'.

Ficheall, if you are going to accuse me of 'blatant dishonesty', at least back it up. I've given my opinion on gambling vs investment above. It appears you don't share this view. I'm not sure exactly where you found me to be dishonest?

You seem to be directing your statement at this paragraph;

Even if there is a dramatic fall in stock prices, you do not lose your stake as you do when placing a bet. Unless the business goes into liquidation, you still have a stake in the business and may recover your losses when the market recovers.
...
it's not so much a money making venture, but more of an opportunity to learn about investments.

In the first instance, I was referring to Fionns post about 'sensible gambling' vs investments and I was trying to point out some of the differences one of which would be the nature of your 'stake'. In gambling, your stake or bet is placed on a single outcome. If the outcome is not as you have predicted, then you generally lose your stake. I know there are other forms of betting but I'm not here to discuss bet types. In terms of stocks, your 'stake' is an investment in a tangible business. Essentially you are 'betting' on the business doing well. However, the difference with basic gambling being that if your predictions are not correct, you are not going to lose your entire stake unless the business goes bust. There is also a chance that your investment may be recouped should the business pick up in future.

You appear to have take the second line in the quote out of context. I was merely reiterating what I had stated earlier - this is not primarily a money-making venture, it is a learning opportunity for those interested. If you're in some way trying to insinuate that my previous explanation about 'investing for profit vs gambling' was illustrating a profit-making goal on my part, i'm afraid you're incorrect. As I said, another poster raised the topic of gambling and I was simply trying to illustrate the difference between the two.

Ficheall

friendface wrote: »

In gambling, your stake or bet is placed on a single outcome. If the outcome is not as you have predicted, then you generally lose your stake. I know there are other forms of betting but I'm not here to discuss bet types. In terms of stocks, your 'stake' is an investment in a tangible business. Essentially you are 'betting' on the business doing well. However, the difference with basic gambling being that if your predictions are not correct, you are not going to lose your entire stake unless the business goes bust. There is also a chance that your investment may be recouped should the business pick up in future.

You're just spread-betting. Lose some, win some - both in gambling and investing. The more you spread the smaller the risk, which you seem keen to point out on investment's behalf, but the smaller the profit. There is no real dividing line between gambling on cards and gambling on the stock market, mathematically speaking.
As for "holding onto a small stake after you've lost the majority of it" - you can offset that by placing another bet. Big deal.

friendface wrote: »

You appear to have take the second line in the quote out of context. I was merely reiterating what I had stated earlier - this is not primarily a money-making venture, it is a learning opportunity for those interested. If you're in some way trying to insinuate that my previous explanation about 'investing for profit vs gambling' was illustrating a profit-making goal on my part, i'm afraid you're incorrect. As I said, another poster raised the topic of gambling and I was simply trying to illustrate the difference between the two.

I meant to respond to the second line separately but forgot to take it out of the quote.
I was going to say that if one is to "learn about investing" then the misleading information doesn't help.

cerebus

Ficheall wrote: »

There is no real dividing line between gambling on cards and gambling on the stock market, mathematically speaking.

I think value investors from Benjamin Graham to Warren Buffett would disagree with that statement.

It appears as though you believe that it is not possible to identify investment opportunities where business fundamentals have been mis-priced by the market, due to some component of sector momentum, irrationality, etc. Sorry if I misunderstood your position (maybe you are comparing randomly throwing money at hot stocks to playing cards? If so, I agree with you!)

Benjamin Graham wrote:

A share in a company is an ownership interest in an actual business, with an underlying value that does not depend on its share price. The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap).

Full credit to Benjamin Graham's "The Intelligent Investor" - I lifted those two lines verbatim from that.

Back on-topic: I think the idea of an investment club at NUIG is a great one. I have seen similar clubs run at other universities, and they provide a wonderful way for people to develop their own investment philosophy using both feedback on their own research and ideas from others. Also a great resume builder if you are looking at getting into the Investment Management industry in some way.

Ficheall

cerebus wrote: »

I think value investors from Benjamin Graham to Warren Buffett would disagree with that statement.

It appears as though you believe that it is not possible to identify investment opportunities where business fundamentals have been mis-priced by the market, due to some component of sector momentum, irrationality, etc. Sorry if I misunderstood your position (maybe you are comparing randomly throwing money at hot stocks to playing cards? If so, I agree with you!)

Oh no, I'd certainly agree that there are some people who were very good and very lucky in how playing the stock market etc. worked for them.
There are also, of course, very wealthy card players who can identify a winning hand and know how to play it.

It's a worthwhile thing to study, I'm sure, but I'd prefer proper guidance, I think, and wouldn't be terribly enthusiastic about joining people who were feeding half-truths from the get-go.
A friend of mine told me a few years ago that it was impossible to lose at poker. I wouldn't be inclined to follow him either.

friendface

Ficheall wrote: »

You're just spread-betting. Lose some, win some - both in gambling and investing. The more you spread the smaller the risk, which you seem keen to point out on investment's behalf, but the smaller the profit. There is no real dividing line between gambling on cards and gambling on the stock market, mathematically speaking.
As for "holding onto a small stake after you've lost the majority of it" - you can offset that by placing another bet. Big deal.

I'm not talking about spread-betting here. I know such a service is provided by Paddy-Power trading and the like. Placing spread-bets on stocks is far riskier and more akin to gambling (be that cards, horses, blackjack, whatever) in that the return on your investment is regulated by daily market trends and market response to unfolding news stories. There is a great deal short-term fluctuation in stock-prices which makes them inherently riskier and which is why they offer more lucrative profits and potential for greater losses.

The investment club I believe would provide a platform to build up an investment portfolio with the aim of holding stocks rather than focusing on short-term buying-and-selling. Stocks are purchased based on research into the business's behind them. Paraphrasing Ben Grahams book which cerebus referenced; 'Stocks should be seen as a percentage stake in the underlying business rather than a tool for trading'. I've only started reading some of Grahams book recently but he makes some excellent points especially with regard to make a clear distinction between 'Value Investing' and 'Speculation'.

I think you perceive the type of investment I'm talking about as being the same as 'speculative' gambling. What I've tried to point out is that investments would be based on stringent analysis of underlying business fundamentals. This is probably the most rewarding aspect of an investment club - gaining an understanding of business and analysis of financial statements. The exciting part is following the performance of selected stocks.

Ficheall wrote: »

I meant to respond to the second line separately but forgot to take it out of the quote.
I was going to say that if one is to "learn about investing" then the misleading information doesn't help.

I don't believe that the information I've given is misleading. If I'm incorrect in any of the points I've made I apologise but at no point was I being dishonest or trying to mislead anyone. I've pointed out at the beginning of this thread that I'm not an experienced investor nor do I have training in financial mathematics or economics. I am keen to learn about these subjects though and the aim here is to get together a group of individuals who share this interest.

cerebus wrote: »

Back on-topic: I think the idea of an investment club at NUIG is a great one. I have seen similar clubs run at other universities, and they provide a wonderful way for people to develop their own investment philosophy using both feedback on their own research and ideas from others. Also a great resume builder if you are looking at getting into the Investment Management industry in some way.

Thank you for your input cerebus. I was starting to wonder if I would get anything other than criticism here for bringing this idea up.

cerebus

Ficheall wrote: »

Oh no, I'd certainly agree that there are some people who were very good and very lucky in how playing the stock market etc. worked for them.
There are also, of course, very wealthy card players who can identify a winning hand and know how to play it.

It's a worthwhile thing to study, I'm sure, but I'd prefer proper guidance, I think, and wouldn't be terribly enthusiastic about joining people who were feeding half-truths from the get-go.
A friend of mine told me a few years ago that it was impossible to lose at poker. I wouldn't be inclined to follow him either.

Thanks for the clarification. Looks like you and the OP just have opposing views of the wisdom/usefulness of pooling student thinking in the investment space.

One thing that could be helpful is to see if there are any NUIG graduates working in IM who would be wiling to mentor the group, it could help with people's comfort levels in terms of proper guidance.

On the whole, I'm a believer in the wisdom of crowds. Depending on the controls/oversight and incentives, I think it should be possible to build a student-led organization where the benefits to members outweigh the risks.

freeze4real

brianthebard wrote: »

getting back to the topic I believe nuim has an economics club that does what you are looking for op, maybe give them an email for some info on what they do and how they got set up.

I'm not sure if maynooth has an investment club as i go to nuim myself.

I'm totally in support as to what the op is saying. I'm into investment myself and i don't really have the money to buy stocks right now.

a group of people coming together will reduce risk and profit but knowledge will be gained.

out of interest would you run it like a mutual fund of some sort.

Finally investment is not gambling.

friendface

Ficheall wrote: »

Oh no, I'd certainly agree that there are some people who were very good and very lucky in how playing the stock market etc. worked for them.
There are also, of course, very wealthy card players who can identify a winning hand and know how to play it.

It's a worthwhile thing to study, I'm sure, but I'd prefer proper guidance, I think, and wouldn't be terribly enthusiastic about joining people who were feeding half-truths from the get-go.
A friend of mine told me a few years ago that it was impossible to lose at poker. I wouldn't be inclined to follow him either.

I don't think luck has an awful lot to do with being successful on the stock market. It does take time and proper research though. If you're comparing card players to fund managers, they're really worlds apart. I would attribute far more of a card players success to luck than skill. For example, hard skills such as mentally computing odds, reading other players tells etc. gives successful card players an edge over their competitors but how often do you see the same players winning major tournaments time after time. The reason is chance plays a huge role. Compare this to successful fund managers. They would be out of business if they didn't produce consistent returns on investment. Investments are not left to chance. There is always associated risk but the goal is to negate this risk through diversification while providing reasonable return on investment.

The terms you're using seems to indicate you see the stock market as a gamble: 'playing the stock market'. Like I said in my previous post, there is a difference between speculation and the type of value investment I would propose the club adheres to. Also, the aim is to gain an education as a group in order to avoid being mislead. There are plenty courses and software packages out there which claim to provide sure-fire ways of making money by playing the stock market. In reality, they are all pure rubbish and serve purely as money-making rackets for their founders and developers.

You say you would prefer proper guidance rather than to be mis-lead by half-truths. There are plenty reputable books and resources for serious investors which I would recommend be studied carefully. These are just as powerful and probably more preferable a tool as the investment courses on offer. If someone wants a low-risk, low-cost introduction to investment, a club such as this would be ideal and would not cost thousands just to participate.

Ficheall

Apologies - "spread-betting" was the incorrect word to use. I meant moreso sort of "spreading one's money over a range of bets", but apparently that's not quite what "spread-betting" means. My mistake.
A portfolio is spreading one's money over a number of options though, which is what I was going for. Yes, it decreases the risk, but along with that, the expected profit.
It is still a form of gambling.

I don't quite see what you mean by "holding stocks rather than focusing on short-term buying-and-selling"? Surely one sells at what one judges to be the optimum time, regardless of whether it's short or long-term, ceteris paribus?

Don't get me wrong - I think researching and then investing in a portfolio is far more interesting and beneficial than simply playing poker or having a flutter on the horses, but that doesn't change the fact that I'd be extremely reluctant to let anyone else have a say in where my money was invested/gambled/whichever.
But people would act differently if they had only a small amount vested - I'm not saying that it would make the venture less worthwhile, just... different... maybe in no bad way.

"Misleading" and "dishonest" may seem a little harsh, perhaps, and apologies if they do. I simply meant that the slant you seem to be putting on the whole business is akin to that of my friend who told me that one can't lose at poker if one knows what one is doing.
I wouldn't worry about not having any training in financial mathematics or economics - I did my degree in those subjects, and I learned nothing of any great use therein. I certainly wouldn't trust anyone in my class to invest my money.
It could just be that I am not a trusting individual!

I don't think it's a bad idea, per se - there are certainly people in the college who would be interested. BizSoc seem to be dying a little - I'm sure they might be keen to do something like this. Or the Accountancy and Finance Society has recently been given full approval as a Society, and there are hundreds of those feckers - some of whom, I'm sure, would be interested in this.

My own personal reasons for not getting involved in your club would be as follows:

- Bluntly - I do not have faith in the average NUIG student's intelligence.
- I prefer to have control over my own money - and do not have faith in my ability to convince others not to invest in some stock which I suspected to be dodgy, but which another was advocating, or vice versa. In that sense, you will have some reckless investors and some more cautious ones in your group. It would certainly be interesting to see what happens.
- I do not have time to devote to researching, rendering participation pointless. And I certainly wouldn't advise anyone in some area which I had not researched thoroughly.
- There will be people who may invest more than they can afford, and I'm not particularly eager to be involved when people start getting upset over losing money.
- At the start of the recession I lost in the region of a grand in a portfolio, which I could ill afford. Once bitten, twice shy - perhaps?
- For the same reasons that many people would not gamble on horses or cards - mathematically your expected return isn't really any greater.

Good luck if you proceed with it though. I hope the people who join you are not disappointed.

friendface

cerebus wrote: »

Thanks for the clarification. Looks like you and the OP just have opposing views of the wisdom/usefulness of pooling student thinking in the investment space.

One thing that could be helpful is to see if there are any NUIG graduates working in IM who would be wiling to mentor the group, it could help with people's comfort levels in terms of proper guidance.

On the whole, I'm a believer in the wisdom of crowds. Depending on the controls/oversight and incentives, I think it should be possible to build a student-led organization where the benefits to members outweigh the risks.

Excellent idea with regard to an IM graduate providing mentoring to the group. If I could get a number of people together, I'd be happy to approach the School of Economics to propose such an idea. One of the lecturers may even be willing to lend their support. Also, it adds a level of authority to the group which as you say would make members more comfortable than if it were a purely student-run club. However, I think it would require a number of dedicated members before approaching any lecturers with the idea.

freeze4real wrote: »

I'm not sure if maynooth has an investment club as i go to nuim myself.

I'm totally in support as to what the op is saying. I'm into investment myself and i don't really have the money to buy stocks right now.

a group of people coming together will reduce risk and profit but knowledge will be gained.

out of interest would you run it like a mutual fund of some sort.

Finally investment is not gambling.

I had a search on NUIM economics website alright and did't find anything of the like. Also, the only student-managed fund I've heard about is based in Trinity. This was the first in the country and was only set up last November.

This would be run like a mutual fund alright. There are guidelines which I've linked to earlier which outline structures for a group like this. Money would be pooled for a period of months before any decisions would be made regarding stock purchase. From then on, it would be a matter of building up a stock portfolio in which each member would have a percentage share. I think it would be a very interesting exercise and a valuable learning experience for all involved.

friendface

[Edit: Warning - Long response below, sorry I got carried away ]

Firstly, thanks for the reply Ficheall, I can see now where you're coming from and why you might be more reluctant to join a club like this. I'll try and address some of the points you've raised as they are reasonable concerns.

Ficheall wrote: »

A portfolio is spreading one's money over a number of options though, which is what I was going for. Yes, it decreases the risk, but along with that, the expected profit.
It is still a form of gambling.

I don't believe the type of investment I'm talking about could be considered gambling in the traditional understanding of the word (i.e. gambling to me generally construes betting on an event of which the outcome is highly uncertain). A Value Investor attempts to analyse and evaluate stocks based on underlying business fundamentals and invests in those he believes to be undervalued. I really don't want to debate whether investment is a form of gambling though, we could probably argue that point for eternity and never answer it definitively because I suppose it's based on a subjective opinion on how one defines 'gambling'.

Ficheall wrote: »

I don't quite see what you mean by "holding stocks rather than focusing on short-term buying-and-selling"? Surely one sells at what one judges to be the optimum time, regardless of whether it's short or long-term, ceteris paribus?

What I meant by that statement was the type of 'investment' practiced by some 'investors' who play the stock market by buying stocks with the intention of selling them within a short time period. I read a statistic recently (may have been in Ben grahams book) that the holding period on U.S. Govt. 10-yr bonds was around 10-days on average (probably outdated if it was in face Grahams book but you see my point). Essentially, these are speculators trading based on market trends rather than strict analysis of underlying value. Stocks are seen as a trading tool for profit-making rather than a portion of a business or security.

Ficheall wrote: »

"Misleading" and "dishonest" may seem a little harsh, perhaps, and apologies if they do. I simply meant that the slant you seem to be putting on the whole business is akin to that of my friend who told me that one can't lose at poker if one knows what one is doing.

Thanks for clarifying that anyway. I didn't like to see myself referred to as dishonest as it was never my intention to mislead anyone. I'd just have pretty strong views in relation to defending true investment vs gambling. Again, i don't want to go down the route of debating that subject.

Ficheall wrote: »

I wouldn't worry about not having any training in financial mathematics or economics - I did my degree in those subjects, and I learned nothing of any great use therein. I certainly wouldn't trust anyone in my class to invest my money.
It could just be that I am not a trusting individual!

Thanks for the encouragement about not having training in these areas. It's an area I have a great interest in and would hope to educate myself as best as possible through study and practical experience. That's one of the reasons for creating an investment group, in order to share knowledge and experience.

I can see how you might be reluctant to trust fellow students with your money when you see some of the graduates. I did civil engineering at undergrad and wouldn't trust some of my classmates to build a snowman. Ok, bit of an exaggeration, but I can see why you might be worried. If it's any help, I would see this group as a place for those who are serious about educating themselves and who have expressed genuine interest in joining. I mentioned previously that the max. size of the group is 20 (as far as I know there's legal reasons behind this). This might only be 10-15 members in size in which case I'd hope there would be a level of trust and mutual respect among members.

Ficheall wrote: »

My own personal reasons for not getting involved in your club would be as follows:

- Bluntly - I do not have faith in the average NUIG student's intelligence.

Point taken, however, like I said I wouldn't be hoping to attract your average NUIG student. It's a fairly exclusive club in that it would be small in size and fairly specialist in its focus.

Ficheall wrote: »

- I prefer to have control over my own money - and do not have faith in my ability to convince others not to invest in some stock which I suspected to be dodgy, but which another was advocating, or vice versa. In that sense, you will have some reckless investors and some more cautious ones in your group. It would certainly be interesting to see what happens.

I know it might seem daunting to have a group of people decides what happens with money you have invested. However, we entrust the government and banks to do just this every day of our lives and it's hard to see how we could do any worse than them Hopefully, I've given some solace in the fact that this would be a small group with trust amongst members. I believe there would be more agreement than you might think if individuals follow the theories of knowledgeable investment strategists.

Ficheall wrote: »

- I do not have time to devote to researching, rendering participation pointless. And I certainly wouldn't advise anyone in some area which I had not researched thoroughly.

Fair enough. I know everyones time is limited. That's also essentially one of the main reasons that a group such as this is the only way interested members may gain exposure to the stock market. By pooling time, and gathering information as a group, hopefully we can reduce the time that would be required on the part of an individual investor. Also, like I've said earlier, members may bring different skills and knowledge to the group based on their discipline and background (science, commerce, law, finance, engineering, etc.). Individuals could be assigned research tasks suited to their background and experience. Finance and Accounting grads - analysing financial statements, Science/Eng - Researching company portfolios and projects, Law - Company legal documentation. Sorry for generalising here, just wanted to make a point of how different skill-sets would be useful as part of the group. The information gathered by individuals would be disseminated to the group at meetings and help educate others.

Ficheall wrote: »

- There will be people who may invest more than they can afford, and I'm not particularly eager to be involved when people start getting upset over losing money.

This I can address pretty easily. There would be a limit set on monthly member subscriptions. This would be very low and should be comfortably affordable. I'm talking somewhere in the region of €10-20 per month to be agreed upon by the group. Again, this isn't a money-making exercise, its primarily a learning experience.

Ficheall wrote: »

- At the start of the recession I lost in the region of a grand in a portfolio, which I could ill afford. Once bitten, twice shy - perhaps?

I can empathise with you here. I too invested around €1000 in 2008 when I started to become interested in shares. I was working at the time so I could afford the loss. I invested in a mutual fund in fact [BGF - New Energy A2]. The fund shares lost around 50% of their value in the next few months and have not seen much in the way of a recovery since. However, unlike yourself, once I was bitten I was hooked and keen to learn investment strategies and how to invest successfully.

Ficheall wrote: »

- For the same reasons that many people would not gamble on horses or cards - mathematically your expected return isn't really any greater.

This may be true for speculative investment. However, by using a value investment strategy, there is evidence for reasonable growth rates year on year. I know it's not the most reliable source but heres a quote from wikipedia It's the only quote I can find on short notice and it does reference academic studies on the subject.

Value investing has proven to be a successful investment strategy. There are several ways to evaluate its success. One way is to examine the performance of simple value strategies, such as buying low PE ratio stocks, low price-to-cash-flow ratio stocks, or low price-to-book ratio stocks. Numerous academics have published studies investigating the effects of buying value stocks. These studies have consistently found that value stocks outperform growth stocks and the market as a whole.

Ficheall wrote: »

Good luck if you proceed with it though. I hope the people who join you are not disappointed.

Thanks Ficheall

HotDogger

Either way, remember this (and I would know):

• Sell high and buy low.

• Fortune favors the bold.

freeze4real

Op let me know how you get on. I'll be setting one up in Maynooth asap.

friendface

freeze4real wrote: »

Op let me know how you get on. I'll be setting one up in Maynooth asap.

Cool, Keep in touch to let me know how things go for you also. I've contacted the Economics department at NUI, Galway so I'll see what they think about the idea. If there were a few investment clubs around the country, it might be an idea to arrange a meet-up once we've set up. Just thinking that further into the future, it would be great to have contact between individual college investment societies. It would allow for discussion on issues of structuring and strategies as well as potentially inviting relevant speakers for a larger audience.

Dman001

OP I think it's a great idea, and something I'd have great interest in. Please keep us updated on you progress. I also like the idea of seeking sponsorship to fund seminars and tutorials in Investment. Like others, I would love to get into the Ins and Outs of buying and selling stocks, but would not be viable to do by myself.

I know very little on Investing, and Stocks and Shares, and know less on setting up Societies and Clubs, but I would love to see this Club taking off. So if there is anyway I could help, please PM me.

friendface

I've been in contact with a member of the School of Business & Economics here at NUIG and he has welcomed the idea of an investment club. I'll try to get a meeting with him over the coming week to see how to this started. In the meantime, if anyone here is interested in becoming involved at this early stage feel free to send me a PM (name and e-mail) and I'll put together a contact list. That way I can organise a meet-up and get information out regarding progress.