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.
Rip West
Ridgway, CO