Gerri Willis of Fox Business News asked about the Beardstown Ladies during an interview this week. Yes, they’re still in existence and prospering. They’ve added new partners. The media still mangles the facts about that mistake. The mistake was largely Disney’s — a federal judge agrees with me. The Ladies committed a human error. Their performance was better than is perpetually broadcasted. You can ask Price-Waterhouse about that. But more importantly, they continue to grow, explore and reach out to remove mystery and fear from investing — enabling a new generation to discover successful long-term investing. We shared some details in this message from Thanksgiving 2010 …
Thanksgiving is a time for reflection, gratitude and hope and in this case, a rekindling of a very special spirit nestled in the cornfields of Illinois …
Of Heroes and Harvests …
It was a beautiful autumn day in the heartland. I attended a couple of investment club meetings … the first in Mt. Carroll, Illinois — near my home town — and the second in the heart of Illinois in place called Beardstown.
I admired the scenery as the combines and heavy equipment toiled to bring in a robust harvest this year and the highway miles rolled by. I have many friends who are farmers. They work hard. It’s nice to see rewards harvested and smiles even if that farm equipment backed up traffic while migrating from one field to the next. The day included reminders of time-honored traditions and legacies while harboring a surprise or two.
The Beardstown Ladies have been using options for their club portfolio. They’ve been doing it for a while now.
I’ll let that one sink in.
The Beardstown Ladies have been an inspiration to a generation of investors. I count them among my friends and heroes.
Did you know that they have a room in a museum dedicated to their investment club?
Still ruminating on that options thing? We’ll come back to that.
It’s true. During my visit to Beardstown, I discovered that the city was once the epicenter of Illinois, larger than Chicago. Beardstown is strategically located on the Illinois river and was a center of commerce back in the 1800s. Abraham Lincoln launched his presidential campaign in Beardstown.
The traditional town square in the center of town hosted one of the Lincoln-Douglas debates.
And down the hall from the Beardstown Ladies room in the museum … is the court room where Lincoln practiced law. It’s the scene of one of the most famous legal arguments. The case is known as the almanac trial. Lincoln was defending the son of some good samaritans from his youth. (They had literally taken young Abe in when he was essentially homeless.) Their son was on trial for murder and Lincoln (think Perry Mason) tripped up the key witness by pointing out that the “full moon used under testimony” was no where to be found in a Farmer’s Almanac.
Yes, the Beardstown Ladies are using options. But that’s not the best surprise.
The club is getting larger and attracting some younger people to participate.
The Ladies meet in the basement of the town hall shown — a former Carnegie Library, typical of those sprinkled throughout the Midwest.
You Can Do This. We’ll Show You How
The words still resonate. I had discovered long-term investing back in the mid-1990s … formed a family and friends investment club, but frankly it probably was hanging in the balance.
And then I attended a luncheon featuring the Beardstown Ladies, Betty Sinnock and Doris Edwards. You can do this. We’ll show you how.
It’s a theme we hope to live and extend at Manifest Investing.
The first of Carnegie’s public libraries displays the motto, “Let there be light” at the entrance.
His first library in the United States was built in 1889 in Braddock, Pennsylvania, home to one of the Carnegie Steel Company’s mills. Initially, Carnegie limited his support to a small number of towns in which he had an interest. From the 1890s on, his foundation funded a dramatic increase in number of libraries. This coincided with the rise of women’s clubs in the post-Civil War period, which were most responsible for organizing efforts to establish libraries, including long-term fundraising and lobbying within their communities to support operations and collections.
The genesis of the Beardstown Ladies was the Business and Professional Women’s association.
A few miles to the north in Mt. Carroll, I had the opportunity to spend some time in the shadow of yet another Carnegie Library … on another Midwestern town square. The Nest Egg investors sport a portfolio that I’d not only be proud to own, I basically do. Their collection of community favorites and promising companies mirrors our most widely-followed stocks.
That’s not a surprise.
The surprise is they’re expanding and welcoming new ladies to the club. On this day, they welcomed our family (including my Mom and Dad) to their gathering. The leadership of ladies like Mary Ann Hutchison and Wilma Colehour is making a difference. Interest is growing with a younger generation and we’re hopeful that these seeds germinate and continue to thrive.
We look forward to watching future harvests and celebrating nurtured nest eggs.
This is just one more nest egg that can point to the Beardstown Phenomenon as a powerful influence and inspiration.
Back to Beardstown
I’m still working on our nest egg. But the Beardstown Ladies have made a significant difference for me and my family as we’ve sent two children to college and launched a business. As we bow our heads on Thanksgiving, I will be thinking of many blessings. I want all of the Ladies to know that they’re pretty high on the list and I told them that as we gathered.
We talked about a few stocks. I watched them thoroughly discuss (and sell) a very long-term holding.
They asked me for some thoughts and I shared the significance and relevance that we’ve discovered with the Value Line low total return forecast.
And then … one of the ladies whispered, “What do you think of options being used by investment clubs?”
I slumped into my chair extruding a “fake sigh.” Most of them seemed to be either “giggling” or looking at their shoes. 🙂
“You mean to tell me the Beardstown Ladies are using options for the club?”
“Yep. We’ve been doing it for a while.”
“Really?”
“Homer, our broker in Peoria, has been teaching and helping us with it. What do you think?”
“One, I think you’re in good hands. Two, I think it’s a great idea. The foundation of investment clubs is learning-by-doing. Explore. Discover. Fail. Succeed. Together. Some of my other heroes have been urging me to better understand conservative options strategies like covered calls and protective puts for the last few years. I’m learning right along with you.”
We’ll launch a new demonstration in January — taking our [BareNaked Million] — and deploying options strategies in full view. We’ll call it [Covered Million] and hope to demonstrate some incremental success using some of the conservative options strategies we’ve become more aware of.
Exploring. Learning. Discovering together. I’m sometimes asked if I believe investment clubs are “dead.” These two clubs provide strong evidence to the contrary and we don’t need an almanac to check sunrise or sunset to see it. Youthful exuberance inspiring the next harvest … it combines with the knowledge that every harvest sunset is also a harvest sunrise. It’s just a matter of perspective.
Happy Thanksgiving, everybody.
Sir John Templeton (1912-2008) started his Wall Street career in 1937 and went on to create some of the world’s largest and most successful international investment funds. He was called by Money magazine “arguably the greatest global stock picker of the century.”
Expecting Alpha 