Beardstown Ladies
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Beardstown Ladies A reader recently wanted
to know where to start in researching the Beardstown
Ladies....
Any research of the Beardstown Ladies should start
with their book........
The Beardstown Ladies'
Common-Sense Investment Guide : How We Beat the Stock Market-And How You Can,
Too
You can get that book at almost any bookstore and
certainly at Amazon or Barnes. I am not quite sure of your purpose for the
research. As you probably know, the book was a tremendous success, almost
overnight. Then, it was discovered that the performance claimed by the Ladies
was suspect. Articles were written in many papers, including the Wall Street
Journal. NAIC has provided resources on that subject, which you can find
at..........
In case you are not familiar with the story,
upon hearing about the discrepancy, the 'Ladies' engaged one of the Big Eight
accounting firms to get to the bottom of the controversy. The firm's report was
made public. The 'Ladies' had been using NCA software and the treasurer entered
the data by using the beginning
balance method. This means that, rather
than entering every transaction since the beginning of the club, the treasurer
started two years in the past by entering the balances as
of that date. However, for income tax purposes, it was necessary to enter all
the stock transactions before the beginning
balance date for each stock still owned. The software has a
report which allows a club to figure the rate of return. When the treasurer did
this, she indicated that the computation should be made for the life of the
club. The software, however, was only capable of computing the return for the
two years since the beginning balance
date. So, the results, as reported, were not for the
history for the length of the club, but for the last two years. Incidentally,
the return for the entire length, although not as high as reported, was still
respectable.
That is my understanding of how
the problem came about. I hold the 'ladies' blameless, although there are those
that have vilified them. I have found that it is very easy to fall into the same
trap as to periods to be computed, and have done so, myself. Everyone has a
slightly different take on what happened. For my part, I think the Beardstown
Ladies have had a tremendous effect on the growth in investment clubs, and have
been a real beneficial force.
I hope this is enough to get
you started. If you run a search on Yahoo, you will find thousands of references
to the Beardstown
Ladies.
Thanks for using bivio, and
please come back if you have any more questions on this or any other investment
club topic.
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