My Account Store Store
SSG Tutorial

September 17, 2002 -


Special Series: Balance Sheet & Cash Flow Analysis
A collection of articles by Jeff Halaka, CFA, CPA

What stock analysis techniques can help us navigate a world turned upside down by Worldcom, Enron, and Lucent? With each of these ill-fated companies, red flags arose in their balance sheets and cash flow statements well before they appeared in their SSGs.

Over the next several weeks, Seger-Elvekrog, a respected money management firm that authors the NAIC Investor Advisory Service, will pen a series of articles about balance sheet and cash flow analysis. Many of you will remember the "Repair Shop" column in the May 2002 issue of NAIC's Better Investing BITS newsletter, in which Ralph Seger, an NAIC trustee and a founding principal of Seger-Elvekrog, revealed red flags in Washington Mutual's balance sheet using the advanced features of NAIC-approved software Stock Analyst PLUS!

The upcoming series takes a comprehensive look at the balance sheet from top to bottom, starting with basic concepts and culminating with a post-mortem analysis of Worldcom using Stock Analyst PLUS!

This promises to be a stimulating series on a timely theme, and will be subsequently archived at as a reference for NAIC members.

More information about the author and Seger-Elvekrog is available at

Find red flags first with Stock Analyst Plus

NAIC's most powerful analytical software, Stock Analyst Plus is the best software for in-depth stock and portfolio studies, with unmatched balance sheet capabilities.

Order for $99 at 1-877-275-6242, ext 0, or online at  More information & demo copies available at  

$99 NCA 2 Offer Extended

Due to customer demand, NAIC and ICLUBcentral have extended the $99 NCA 2 upgrade offer until NAIC exhausts its stock, so you still have a chance to get one before the upgrade version disappears!

Users of NAIC Club Accounting 1.04 - get current with tax law by upgrading to NAIC Club Accounting for Windows version 2. To purchase, see or call NAIC at 1-877-275-6242, ext 0. 

Investment Club Therapist: Smells Like Club Spirit

Dear Doug:

Do you know of any place we can get shirts, cups, pens, etc., made with our club's logo?  The problem I am running into is every place I contact will not make any items in a small quantity -- we only have 15 members.

- Debbie

Dear Debbie:

Ah, there’s nothing like customized merchandise to generate a little club spirit! Imagine the envious looks your club members will receive when they strut their stuff in matching t-shirts emblazoned with your club’s logo.

But as you’ve discovered, many companies won’t custom print items like these except in quantity, leaving groups like yours out in the cold. Fortunately, the Internet has made it easier for companies to print small quantities of customized merchandise. and are two companies that print customized products, including t-shirts, mouse pads, backpacks, coffee mugs, and other items with any logo or artwork that you desire. You can order one or a dozen items – many fewer than you’d be forced to buy if you used a traditional printing firm.

You’ll need to come up with a snazzy logo on your own, of course. But perhaps one member of your club has some artistic skills and can create a unique design to be used on your selected items. There are many uses for these customized items. Besides instilling a sense of club pride, you can use products for member prizes, or as gifts for speakers who visit your club.

If you do choose to buy shirts or mugs for your members, remember that the IRS won’t consider these a deductible investment expense.

- Doug

Doug Gerlach, author of several popular investing books and websites, serves in his spare time as Secretary of NAIC's Computer Group Advisory Board. To ask Doug an investing question yourself, just write to!

Club Notes: Early Resolutions for 2003 

Okay, I know it's only August and we still have plenty of 2002 left - but this year has taught investment clubs a lot. With the market having such excellent years up to 2000, many investment clubs forgot the basics. The past few years have reminded us that investing is not always easy. Below are some of the lessons I learned over the past few years, and some that all investment clubs should keep in mind as you plan for a fresh 2003. 

  1. Sometimes clubs need to be happy with returns of 7 – 10%. Most clubs would love those returns this year. Yes, we want to double our investment every 5 years - but 14.9% (dividends reinvested) every year is unlikely.

  2. Remember to diversify. Clubs that were heavily invested in technology in 2000 and 2001 got killed. Taking a bath on the Cisco's and Yahoo's of the world only truly hurt those clubs that held a majority of those types of stocks in their portfolio. When balanced out with long-term earnings performers like Wal-Mart, the club's portfolio can sustain hard-hit stocks.

  3. Buy stocks that have earnings. Many clubs just had to have those tech stocks, regardless of valuation or earnings projections. Those stocks with solid, long-term earnings held up well (or at least better) through this bear market.

  4. Don’t listen to analysts. Do your own research. Analyst's opinions can be interesting but do not base your purchase on it. Remember, analysts fall into 2 categories, those that are right and those that are wrong. I like my odds better than 50%. Using the stock study tools the NAIC has to offer works far better.

  5. Don’t look at the market everyday. Investment clubs should look at the long term. Analyzing every bump in the road may give you a heart attack, especially this year.

  6. Invest internationally - or at least invest in companies that have a global presence. Some international markets and economies have held up well this year.

  7. Don’t predict bottoms. For that matter, don’t predict anything. Predicting leads to speculation, speculation leads to gambling. If you start predicting the behavior of stocks, go out and take a nice walk – or maybe a hot shower. When an investment club purchases a stock the time horizon should be at least 5 years - or longer.

  8. Be wary of stocks under $5 per share. Penny stocks can be very risky and your club may not want that risk. Mutual funds tend not buy stocks under $20 per share. When a stock has little institutional involvement, it may fluctuate wildly based on the movements of day traders. Scary?

  9. Don’t forget about dividends. Nobody cared about dividends in 1999. Who needed them with 100% returns? 2000 - 2002 were different. Your club may want to look at dividend producing stocks, such as those in the Dow, for 2003.

  10. If you ask yourself, "How low can it go?", it probably can go lower. There is no need to mention the number of high-fliers that are now below $1. If a stock is moving lower, analyze the fundamentals. Has something changed? If it has to the downside, it's probably time to sell.

If any of these resolutions make sense to you or your club, consider creating an easy-to-follow operations plan, if you don't already have one. This is especially helpful for newer members and gives some clubs much needed direction.

by Joe Pulizzi, investment club freelance writer 

Newsletter Archive

Subscribe to newsletter

Unsubscribe from newsletter

About    Press    Management    Privacy Policy    Terms of Service    Contact

copyright © 1989 - ICLUBcentral Inc. or its affiliates