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April 13, 2004 - ICLUB News
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ICLUB Insider April 13, 2004


IAS Tops the Markets...Again!

If you read this newsletter regularly, you’ve probably heard us rave about the Investor Advisory Service (IAS) before. Well, it turns out we’re not the only ones raving!

The Hulbert Financial Digest, the major independent investment letter rating service, recently reported that IAS beat the markets yet again, posting a gain of 38.1% in 2003, versus an increase of 31.6% by the Wilshire 5000 broad market index. According to Hulbert, IAS has gained 108.8% over the last five years (an average of 15.9% per year), versus just 6% for the Wilshire 5000, an average of just 1.2% per year.

I’ll repeat that, just for effect: According to the Hulbert Financial Digest, IAS has gained 108.8% over the last five years, during which time the Wilshire 5000 has added only 6%.

That means that if you had started five years ago with an investment of $100,000 in the IAS's recommended stocks and followed its guidance through the years, your nest egg would now be worth $208,800. On the other hand, a $100,000 investment in the Wilshire 5000 would be worth $101,200. Your IAS growth of $108,800 would be nearly 100 times as large as the Wilshire’s $1,200 gain!

Wow! Now, IAS is unlikely to beat the Wilshire 5000 by a factor of 100 every year, but when it does, we’re certainly happy!

But we’re not bragging, really -- we just publish the newsletter. The brains behind the stock picks are the Chartered Financial Analysts at Seger-Elvekrog, a money-management firm founded by longtime NAIC investing guru, Ralph Seger. So congratulations are in order to Ralph, Maury Elvekrog, and Scott Horsburgh for racking up such enviable numbers!

In celebration of this excellent performance, we’re offering a limited-time discount on IAS subscriptions in conjunction with local NAIC chapters. To learn the details of this promotion, which runs only until June 1, please get in touch with your local chapter representatives or attend a local NAIC event. (And what a deal that is -- expand your investment knowledge by participating in one of your local chapter events or Investors Fairs and save a bundle on one of the top-performing investing newsletters in the country!)

For more information on the Investor Advisory Service, please visit:

ICLUBcentral Customer Support Update
Resolving NAIC Stock Analyst Conflicts
by ICLUBcentral Customer Support

It's been an exciting week! We've just released a couple software updates to enable smoother functioning of our various NAIC Software products on the same computer.

First, we released a patch to address the problems some NAIC Investor's Toolkit users had encountered after installing the new NAIC Stock Analyst. We traced this problem to the fact that the installation of NAIC Stock Analyst was modifying certain files that the program shares with Toolkit. We created a very small (1 Kb) patch that resolves this issue and allows users to run both Toolkit 4 and NAIC Stock Analyst on the same machine. To download this patch, please visit:

Note that you should download this patch if and only if you've had difficulty running NAIC Stock Analyst and NAIC Investor's Toolkit on the same computer. To run the patch, simply double-click on it after saving it to your hard drive.

Second, we have resolved a compatibility problem relating to NAIC Stock Analyst and NAIC Classic Plus. After installing NAIC Stock Analyst, some users encountered difficulty in opening Classic Plus. This was due to modifications made by NSA to a file called SSLstBar.OCX, which is an activeX driver used by both programs. The good news is that the latest version of this file allows both to run without any difficulty. So, if you're having trouble using NAIC Stock Analyst and NAIC Classic Plus on the same computer, you should download this driver file from:

Simply save this file on your hard drive under C:\Windows\SYSTEM32 (or if you are using or upgraded from Windows 2000, the directory would be C:\WINNT\SYSTEM32). Installing this driver will also resolve a separate issue reported by Classic Plus users from time to time in which they receive a "Runtime Error 339" which indicates that this file is missing or corrupt. This patch will kill two birds with one stone!

If you don't have any of the above problems, then there's no need for you to use these downloads. Let sleeping dogs lie! If you have any problems or questions about these topics, or if there's anything else we can help you with, please feel free to call us at 617-661-2582. Or, for faster service, just submit an email request at:

Last Chance to Register for CompuFest 2004!

CompuFest 2004 is shaping up to be one of the best NAIC conferences in history! Already, registrations are running at an all-time high, and time is running out to secure your place at the NAIC Computer Group Advisory Board's national conference on computerized investing. Also, registration fees go up after April 26th -- if space is still available!

While much of the CompuFest 2004 curriculum focuses on helping you to make the most of your personal computer, NAIC Software and financial web sites, you don't need to be a computer "expert" in order to participate. The CompuFest program is jam-packed with seminars that teach the basics of the Stock Selection Guide, PERT and other NAIC tools. If you've never taken the leap and started using software to help you make better investing decisions, CompuFest is your opportunity to evaluate all the available programs and get hands-on experience using them under the watchful tutelage of experienced volunteers and experts from ICLUBcentral.

All of us at ICLUBcentral look forward to meeting you at CompuFest 2004 in St. Louis, MO, June 18-20, 2004.

For more information, visit:

Part 4 of a Series: What Is the NAIC Stock Selection Guide All About?
Estimating Future Growth
by Ralph Seger; President, Investor Advisory Service

(Editor's Note: NAIC's Stock Selection Guide is the cornerstone of the Investor Advisory Service, and is used by Ralph Seger and the analysts at Seger-Elvekrog to select and follow each company included in the newsletter. In this issue, we are pleased to offer the third of a multi-part series of tips that delve into the basics of the SSG and how it can best be used to identify stocks for your portfolio.)

Prior to 1954, the NAIC SSG did not incorporate P/E ratios as a method of valuations. Alex Carroll brought this concept to the NAIC convention that year, and it was quickly adopted.

As earnings are gradually accumulated during a fiscal year, the price investors are wiling to pay for the stock tends to represent investors' valuations. In section 3 of the SSG, the relationship between high and low fiscal year prices are represented by high and low P/E ratios. If EPS decline sharply during a fiscal year, the price does not always fall a comparable amount as investors view this as a temporary situation. Therefore, it is advisable to delete abnormally high P/E ratios when proceeding to estimate what the future P/E ratio will prevail. Please note all per share data such as EPS, prices and dividends must be evaluated in a common time frame, the fiscal year. Using annual price ranges to calculate P/E ratios for EPS generated in a non-calendar year is an exercise in lack of logic.

Making a judgment as to estimating what future P/E ratios will prevail is a job requiring an understanding of what is logical and what is speculative. There tends to be a relationship of P/E ratios and growth of EPS, and this relationship is affected by what institutional investors are willing to pay for each dollar of earnings a company makes.

Some investors use techniques for determining the value of a stock which does not relate to P/E ratios. (Technical analysis and momentum investing are typical examples.) As we saw during the March 2000 to March 2003 bear market period, stock market bubbles that are fueled by emotion and hype eventually explode, much to the regret of those who were sucked in.

What is a reasonable P/E ratio to pay for a stock? This is a question about which many people disagree. Perhaps a better question to ask is what is an "excessive" P/E ratio? Typically, the P/E ratio of large market capitalization (price times the number of shares) stocks that are favorites of institutional investors frequently sport P/E ratios that are more generous than lesser known issues. Such generous P/E ratios have built into them an expectation of future favorable results. It is when such results fall short of expectations that the price and P/E ratio of the stock takes a tumble.

Sometimes the P/E ratio history of a company goes to the other extreme. For example, stocks of home building companies tend to sell at modest P/E ratios because of the understanding that as mortgage interest rates move up, more and more potential home buyers are going to decide that they can't afford the required monthly payment and decline to buy.

Examining the historical record of P/E ratios is one way of estimating what the future P/E ratios may be. This is a very important judgment because Section 4 of the SSG uses P/E ratios to calculate potential future high and low prices. The high price is a multiple of the estimated future average high P/E ratio and the estimated EPS five years in the future. If one is too optimistic as to future EPS and/or a future high P/E ratio, the SSG will suggest a stock is a good buy. Of course, only future events will determine the accuracy of the judgment. Unfortunately, too many investors make an optimistic assumption which hard cold logic suggests may be a route to a financial disappointment or disaster.

To be continued....

For more information on the Investor Advisory Service, please visit

Product Buzz: Updates on our NAIC Software Products

Is your computer fitted out with the latest and greatest NAIC software? Here's an overview of the programs currently offered by ICLUBcentral:

NAIC Classic (Plus)....................................Current Version: 2.1.0043
Order ] [ Info ] [ Download demo ]

NAIC Investor’s Toolkit (Pro).........................Current Version: 4.0.18
[ Order ] [ Info ] [ Download demo ] [ Updates ]

NAIC Take Stock............................................Current Version: 4.0.0
[ Order ] [ Info ] [ Download demo ]

NAIC Stock Analyst....................................Current Version: 3.0.0001
[ Order ] [ Info ] [ Download demo ] [ Updates ]

NAIC Stock Prospector...............................Current Version: 2.5.0037
[ Order ] [ Info ] [ Download demo ]

NAIC Club Accounting..................................Current Version: 2.5.11
[ Order ] [ Info ] [ Download 2.3.5 demo ] [ Updates ]

NAIC Online Club Accounting................................Always Current!!
[ Order ] [ Info ] [ Demo website ]

2003 NAIC Club Tax Printer.......................Current Version: 1.0.0020
[ Order ] [ Info ] [ Download ]

2003 NAIC State Tax Printer.......................Current Version: 1.0.0017
[ Order ] [ Info ] [ Download ]

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