Amy Rauch Neilson relates the stories of successful individuals and investment clubs willing to share the reasons for their success.

Going it alone: Becoming an individual investor in the stock market

By Amy Rauch Neilson

For more than 15 years, Ed and Nancy Isaacs of Toms River, N.J., owned and operated the Pet Gallery, a pet store that specialized in tropical fish. "The business started as a hobby," Nancy said. "And, at one point, we had 72 fish tanks in our garage."

Their hobby soon grew into a business and the Isaacs moved into a storefront. There, fish of every color, some that had traveled thousands of miles, graced their tanks. "We had the kind of fish that people came from all over to buy," Nancy said. "Some were specially imported from lakes in Africa."

Like the Isaacs, their customers found collecting tropical fish to be an enjoyable hobby. "On a typical Saturday afternoon, a father would come in with his son and buy a tank or some fish," Nancy said.

But, after a decade and a half in the business, Ed began to experience ongoing health problems. And so, the Isaacs decided to sell the business. Now, they were faced with a challenge - how to wisely invest the lump sum of money they had as a result of the sale.

Self-employed individuals, like the Isaacs, can't count on reaping the benefits of an employer-driven plan at retirement. "We don't have a 401 (k) plan," Nancy said. "We're investing on our own so that we can keep ourselves comfortable through retirement."

Luckily, investing wasn't a totally foreign concept to Nancy. In the mid-1980s, she had had an investment account with E.F. Hutton. Her broker, a young woman named Susan, also happened to teach an investing course at a local community college. "She encouraged me to take $1,000 and invest it, and every time I did, she'd teach me about that investment," Nancy said. "That's how I learned, for example, about bonds and interest rates."

Nancy was stepping into the world of investing for the first time. That was all fine and well with small sums of money. But the sale of their pet shop in 1987 was another story.

"There was some serious money there," she said. "My husband and I sought the advice of a broker at Merrill Lynch, but he would advise us to buy an investment and we'd have no idea how to follow it.

"We were really uncomfortable with that approach," Nancy said. "We'd ask our broker why we should purchase that investment, and he'd say, 'Because we're recommending it'.' We started to feel out of control."

That's when Nancy struck out on her own to learn about investing. "I really wanted to learn; I wanted to understand it for myself," she said. "So, I went to the bookstore, but all of the books seemed either too technical or were focused on 'get rich quick' schemes.

"Then I came across the Beardstown Ladies' book, Common-Sense Investment Guide. It was exactly what I had been looking for. It was clearly written; it made sense," Nancy said.

The book also mentioned the National Association of Investors Corporation (NAIC), a non-profit investment education association headquartered in Madison Heights, Michigan. Like InvestwareInve$tWare, NAIC is a proponent of buying stock in companies with good track records and holding on for the long term.

Nancy noticed the references to the NAIC as she made her way through the book and decided to become an NAIC member. Ironically, she came across the NAIC name again on CompuServe a short time later. "I had signed up for 30 days free on CompuServe and was surfing the Web when I came across the NAIC," she said. "And I thought to myself, could it be the same organization?"

Curious, Nancy looked a little farther into the NAIC. That's when she discovered the NAIC Forum, a place in cyberspace where investors can ask and answer questions. "I started asking questions," she said. "Pretty soon, it was nonstop.

"Then I became a SYSOP (systems operator). People began to joke that NAIC would have to hire a full-time SYSOP (systems operator) to answer all of my SYSOP questions."

But she also gave plenty back. "The more questions I asked, the more I learned, and the more questions I was able to answer for other investors," she said.

Nancy began to wish she belonged to an investment club so that she could participate in such camaraderie on an ongoing basis. She expressed her sentiments on the NAIC Forum. "That's when one of the other investors pointed out that I was part of a club - the Forum. I agreed that he was right."

She also joined another online discussion group - the NAIC I-Club List. "The NAIC I-Club List can open up a whole new world of investors to you," Nancy said.

In fact, both the NAIC Forum and the I-Club List can be a great compromise for someone who wants to remain an individual investor, yet welcomes the support and opinions of other investors. "I'd love to join a club because working together is great," she said. "But sometimes it's hard to find people who are at the same level of knowledge as you are, who also share the same long-term philosophy."

Nancy did make a go of starting an investment club a few years ago. "Many of the members were in their 30s, busy with careers or children," she said. "I was doing most of the work, presenting the stocks, driving a long way to the meetings. It was a lot of work on my part and I wasn't learning from it."

So, Nancy decided to continue to invest as an individual. "Now, I consider the NAIC Forum and the I-Club List to be my club. There, I get all of the support and camaraderie that Ithat I need."

An online "club" Both individual and club investors who follow a long-term approach to the stock market can subscribe to the I-Club List via e-mail at no cost. More than 2,500 other members join in on stock discussions every day and, each month, a moderator leads an online workshop, either a study of a particular stock, an analysis of an industry, or a lesson on a related investing subject.

Today, five years since she first joined the NAIC, Nancy is a vital part of the ongoing exchange of information through both the NAIC Forum and I-Club List. On a cyber-visit to either place, you might have the opportunity to glean the following tips from her:

• Join the I-Club List, the NAIC ForumNAIC Forum or a similar forum. "I'd be lost without them," Nancy said. "My husband isn't really interested in investing, so I don't have people to discuss it with. So, if I have a question or a problem, I go online and ask other investors for their opinions. That starts a discussion and hopefully, other people are learning from it, too."
• Read everything you can get your hands on. Beyond the I-Club List, Nancy reads "Better Investing" Magazine magazine and "BITS," both NAIC publications, and subscribes to the NAIC "Investor Advisory Service."
• Don't buy a stock unless and until you've studied it. Nancy's favorite companies, including Century Telephone, Clayton Homes, EMC, Gentex, Home Depot, and Biomet, have all come to her through her reading and online discussions. "It wouldn't occur to me in a million years to buy a stock without doing a Stock Selection Guide (an NAIC stock study tool) first," Nancy said. "I'm a fanatic about it."
• Make a commitment to whatever stocks you decide to purchase. "Once you've made the decision to buy a stock, follow it on a quarterly basis," Nancy said. "Assume you're going to keep it forever. Only think about selling it if the fundamentals are bad, quarter after quarter."
• Don't get discouraged if, after a period of time, you still don't know everything. "I can never learn enough about investing," Nancy said. "I'm never done. Whether it's a portfolio management workshop or an online discussion with another investor, I'm hooked."