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A Worthy Mission and Some Staunch Allies

For years, the average person has greeted the notion of investing in common stocks with varying degrees of fear and trepidation. Horror stories abound; and the recent "bubble bath" - the financial dousing that many stock market dabblers have taken as the "dot.com bubble" exploded and the "wrecked techs" dotted the investment landscape - has done nothing at all to dispel any of those fears.

	Take Stock: A Roadmap to Profiting from Your First Walk Down Wall Street by Ellis Traub Order your copy

Of course, the omnipresent, omnipotent financial professionals have stood by at our service, ready to protect us from our own ignorance and to help us navigate safely through the dangerous shoals on our way to building successful portfolios. It would seem that, if one is going to make any money through investments, he or she must expect to share the proceeds with one or another of these Samaritans. After all, they're seasoned warriors on that hostile battleground; they're familiar with all of the arcana that surrounds the financial world, and they can make you rich! Yet, by and large, they didn't fare a whole lot better.

Now I do mean to give all the credit they deserve to those among the financial professionals that deserve it - and by this I mean the many who sincerely go about their tasks, motivated by the earnest eagerness to make their clients wealthy and to earn their keep by doing so. However, there is sadly very little to permit the average would-be investor to readily tell the difference between the "good" professional and another who blindly recommends investments that will benefit his or her employer or who hasn't made a genuine effort to find out the difference between a good and a bad investment. They don't wear special nametags or have visible halos or horns - although one could almost find an inverse relationship between genuine qualification and sociable salesmanship!

For my money, the "good" professional is one that is educated in finance, knows and enjoys what he's doing, and is especially delighted to have a client that is also educated, or at least wants to become knowledgeable.

	"my column appears on this site because, as do its custodians, I have a mission"

However, my column appears on this site because, as do its custodians, I have a mission. That mission is empowerment - the emancipation of the average man and woman from fear of the stock market, from the perception that it's dangerous and hostile, and freedom from the belief that successful investing is beyond their capability - that it requires the services of a professional.

I was attracted to this site by the high-mindedness of its founders and the simplicity of their purpose. Here are two guys, both having enjoyed success in their chosen fields, eager to find something worthy they could do together. They decided quite analytically that investing was an important activity and that doing it with someone else with the same interest was better than going it alone. (The word, "bivio" - Latin for "crossroad" - signifies the intersection of those two ideas. So it was in that pursuit that they thought they could make a difference.)

Who is Ellis Traub? Ellis Traub is founder and Chairman of the Board of Inve$tWare Corporation. After creating a computer program called "Take Stock" that embraced the BetterInvesting methodology, Traub was invited to develop BetterInvesting's official software, the Investor's Toolkit. The National Association of Investors Corporation (formerly NAIC, now BetterInvesting) is a non-profit organization whose goal is to empower both investment club members and individual investors to invest successfully in common stocks. In 1972, before BetterInvesting, Ellis started learning about investing in the stock market the hard way, when he followed the advice and strategy of a stockbroker "friend." When the market dropped, he lost all of his savings and more, since he had also borrowed on margin. This lesson kept him out of the market for the next 15 years. In 1988, he fortuitously ran across a newspaper article that mentioned a seminar dealing with how to evaluate common stocks, which was to be offered that Saturday by BetterInvesting. That Saturday, his life radically changed. Ellis joined BetterInvesting in 1988 and has been a Life Member since 1991. He is past chairman of NAIC's Software Developers' Advisory Council, past member of the NAIC National Computer Group Board of Directors, and currently serves as an active member of the Executive Committee of the Southeast Florida Chapter, having been a director of that chapter since 1989. A popular speaker at national events as well as at many BetterInvesting chapter functions across the country, he has written many articles appearing in Better Investing's magazine and in "Bits," the Computer Group's newsletter. Ellis flew for Eastern Air Lines for 31 years (during which time he was also involved in several other businesses), and retired as a Lockheed 1011 Captain in 1987. Before that he was a US Marine Corps night fighter pilot with service in Korea. He is an alumnus of Harvard and Cornell Universities and lives with his wife, Dianne, in Davie, Florida. His son, David, who assumed the responsibilities of president of Inve$tWare in November of 1998, wrote the most recent versions 3 and 4 of the Investor's Toolkit.

And, in the interest of facilitating the success of those that choose to take advantage of what they have to offer, they have been actively seeking to bring together allies in this empowerment mission. And that's why I'm here.

My qualifications (as you'll know if you read my book, Take Stock: A Roadmap to Profiting from Your First Walk Down Wall Street, Dearborn 2000) are simply that I've been there and done that. I don't have a wake of alphabet soup following my name. I have only a dreadful experience with the stock market in my past - so bad, in fact, that it drove me away from it until late in life.

	"my qualifications are simply that I've been there and done that"

Happily, I did stumble upon a methodology that works. It works fine for me as it has worked for more than 5 million other amateurs over the past fifty years. Few of those have been rocket scientists or Mensa members either. That method is the one that has been taught by the wonderful corps of volunteers of the National Association of Investors Corporation's BetterInvesting.

Sad to say, this non-profit organization is one of the nation's best-kept secrets. Just why they're reluctant to shout their virtues to the rooftops I don't know. Certainly, had I known about them when I first ventured into the stock market, my life would have taken a different course - or at least I would have arrived at a state of financial security a whole lot sooner. I think it would be tragic if the hundreds of thousands of other people who are just as ill equipped as I was when I lost my shirt weren't made aware of this organization and its potential to help them become financially self-sufficient - even wealthy.

The more than 3 thousand volunteers in more than 110 cities across the country, offer more than 10 thousand events each year intended to educate the individual investor and teach him or her how to determine the quality stocks to buy, at what price to buy them, and when, if ever, they should consider selling them. Every month, NAIC's BetterInvesting publishes Better Investing magazine which, since the first of this year, can be found on most bookstore newsstands. And it publishes BITS, a newsletter for those using computers in their investment activities.

	"NAIC [BetterInvesting] is an important ally in this mission to empower normal human beings"

So BetterInvesting is an important ally in this mission to empower normal human beings to be able to make sound investment decisions and intelligently buy the best investments of all - common stocks. I would urge anyone with a desire to become so empowered to explore membership in that organization.

Speaking of normal human beings, how about this quote from yet another ally: "Any normal person using the customary three percent of the brain can pick stocks as well as or better than the average Wall Street expert." This comes not from some sensationalist trying to get your attention; but from none less than Peter Lynch, the consummate professional, whose wonderful books, One Up on Wall Street and Beating the Street (both from Simon and Schuster), are definitive works that inspire the average person, you and me, to realize that successful investing is within the grasp of any of us. Incidentally, the second chapter of the second book is dedicated to praising BetterInvesting.

	"Technamental Analysis is the approach I will champion in this venue"

The American Association of Individual Investors (AAII), also a major non-profit organization, is yet another strong ally devoted to educating the individual investor. Viewing the task from a somewhat different perspective, its approach is to offer its membership as much information as possible about all credible investment disciplines rather than just one, with a resolve to be biased toward none. The "Technamental Analysis" approach which I will champion in this venue, and which is similar to that taught by BetterInvesting, is just one of the many disciplines about which their fine publications are intended to educate their members.

All of these entities and many others, though they may not communicate with, may not be aware of - or, in some cases may even be at odds with - each other, are still staunch allies in the mission. That mission is simply to help you and every person who believes that the stock market has to be dangerous, complex, or expensive see the light.

In the coming months, I'll share my thoughts about the simplest, safest, and most common - sensible way to invest in common stocks around - one that has traditionally enabled those that follow it to pick four out of five stocks that will do well and double their money every five years.

	"there are only two things you need to know about a stock to be a successful investor"

There are only two things you need to know about a stock to be a successful investor. The first is whether the company you're interested in is a good quality company, one that is capable of growing its earnings at a good enough clip to enable you to make enough money from the investment. The second is whether the stock of that company is selling at a reasonable price. These things are truly easy to learn.

Not only is it a simple method, it's relatively carefree. You don't have to watch your portfolio every minute, hour, day or even month. Nor do you have to worry about the daily ups and downs of the market. You have only to buy stock in a reasonable number of good quality companies and, every quarter or so, check the fundamental performance of those companies, having surprisingly little concern for their stocks' prices.

The things you have to know about those companies are few and easy to understand. In fact, if you can tell the difference between a crooked and straight line, and whether it slopes up or down, you have all the skills you need to tell if your choice of company is a good one.

As to whether the stock is selling for a reasonable price, you need only make a couple of conservative estimates that are based on what you find out about the company's history and you'll have a pretty good idea right away.

So, on a regular basis, you can expect to see information in this column intended to answer your questions about that methodology and help you discover how easy it is for you to produce as good a portfolio as your professional friends - or better. In fact, if you have such questions that you would like me to answer in this column, feel free to ask me at take_stock@bivio.com. And stay tuned!