| ICLUB Insider |
July 27, 2006 |
THE LATEST NEWS ON
INVESTING SOFTWARE BUILT BY ICLUBCENTRAL INC.
Summary
A new update is now available for Club Accounting 3, the most powerful investment club accounting software on the market today. Version 3.1 is a major revision, addressing both outstanding software issues and feature requests from customers like you.
What's new in Club Accounting 3.1:
New Capital Gains & Losses report (like Schedule-D) helps you track year-to-date capital gains and losses New Security Dividends report gives you quick access to dividend information for all securities Improved display for charts and graphs Faster reports, including a progress bar while they run Fixed an error preventing some withdrawals from being deleted Remarks are now viewable when editing merger and spinoff transactions Spinoff transactions now display cash-in-lieu amounts when edited
If you're a current user of Club Accounting 3, you should be receiving your complimentary 3.1 upgrade CD in the mail shortly. If you've ordered Club Accounting 3 within the past few weeks, we've held your shipment in order to include the Club Accounting 3.1 upgrade. We've been working hard on finalizing the 3.1 software, and we want to make sure that you have the absolute latest release of the program. If you have any questions regarding the status of your order, please contact our support team.
Due to changes in the underlying Microsoft .NET technology incorporated in Club Accounting version 3.1, this update cannot be delivered to users via the auto-updater functionality in the program. Please follow the instructions included with the CD to install the updated program.
There is no charge for this update to version 3.1, but you
must be using version 3 of Club Accounting to
install it. If you are still running versions 1 or 2 of
Club Accounting, please take this opportunity to
upgrade to the latest version of the software. Earlier
versions do not recognize the recent changes in Federal tax
law and will be unable to use the Tax Printer software.
Remember, support for Club Accounting 2 will end on October
16, 2006 (less than four months from now), so upgrade today to
the most powerful club accounting software on the market -- Club Accounting 3.1!
If you have any problems installing Club Accounting 3.1 or questions about upgrading from Club Accounting 1 and 2,
please contact ICLUBcentral Technical Support.
Ralph Seger co-founded Seger-Elvekrog Inc. in
1981 and is now Chairman Emeritus of the firm. He was also a
founder of the Investor Advisory Service, now published by
ICLUBcentral Inc. In this issue of ICLUB Insider, we are pleased to offer the
third installment of a multi-part series called "Investment Wisdom" that will
offer our readers access to Ralph's wealth of
financial knowledge. Be sure to watch this space for future
tips from Ralph.
In our last installment, Ralph described four primary types of risks faced by investors: loss of purchasing power, business risk, market risk, and interest rate risk. In this edition, he offers some advice on minimizing these risks through the construction of a sound portfolio of stocks.
To minimize the risk of losing purchasing power, individuals should invest in stocks, not government bonds. Ownership of a stock entitles the shareholder to share in the profits of the company. The rate of return on equity is usually at least twice the interest earned from a fixed income security. Not only that, but gains from appreciation in the price of stocks can be deferred until sold. Therefore, investing in stocks offsets the ravages of inflation and results in both a lower tax rate, and having the choice as to when to recognize the tax liability.
To manage business and market risk, you can easily evaluate the profitability, managements' competency, growth characteristics, and valuation parameters of a particular stock before you buy it. It's a good idea to continue this process by reviewing a company's profit margin growth each quarter and re-evaluating the company's fundamentals each year. Market risk, like all other risks, cannot be eliminated, but it can be minimized by using judgment and avoiding greed.
In an attempt to control these risks, some investors try to "time the market." Unfortunately, this is an exercise in futility. Essentially, "timing the market" means trying to make money by jumping in and out of the market -- buying low and selling high. Many studies have demonstrated that getting in and out of the market is a risky endeavor. Who's to say that the investor will successfully select the time to get back into the market? During the 1980s, the total return on stocks was about 17% per year. If investors had retreated to cash and missed a small fraction of the days when the market surged upward, their rate of return would have been in the low single-digits, comparable to what they might have earned by keeping their money in a bank savings account.
Another ill-advised risk management strategy is tactical asset allocation. The theory behind this strategy is that the short-term outlook of the market and economy should dictate changes to the ratio of stocks to bonds in a portfolio. But which short-term outlook is correct? There are lots of highly paid Wall Street "experts" who are free with their advice, and each has a different opinion. Think about it: trying to forecast future interest rates, Federal Reserve policy, the economic cycle, political changes, and the like is difficult in itself. Trying to figure out which of these forces is going to impact the securities markets is like trying to fill a bottle with lightning bugs to illuminate the road on a dark night.
The best bet? Coordinate your investments with your own objectives. If the objective is long-term accumulation of wealth to provide for future financial security, then you must take this into account. Over the long-term, the price of the stocks of well-managed growth companies - if purchased at a reasonable price - will appreciate at a comfortable rate.
Be aware, however, that there are no permanent investments. Lots of things can and do change, such as management, competition, the economy, productivity, engineering, research and development, and the effectiveness of marketing efforts. Constant vigilance should be your watchword.
Besides overseeing the day-to-day operation of ICLUBcentral, Doug is also a pseudo-famous personality in the investing world. An ever-popular speaker at investor fairs and investment club events, he moonlights as the Editor-in-Chief of ICLUBcentral's Investor Advisory Service. Doug has also authored several books, including The Complete Idiots Guide to Online Investing and Investment Clubs for Dummies. We sense a trend.
We recently launched what I think is a cool new feature on Club
Accounting Online at myiclub.com -- a Watch List for your club. With
the Watch List, your club members can add stocks that they want to keep
an eye on, and then track their performance over time. Or, you can use
the Watch List to help you manage stock picking contests within your
club.
To use the Watch List, click the red "Watch List" tab at the top of the
page after you log in. Then click the "Add a new company" link on the
page to add a stock.
Next, just enter a ticker symbol (or look up a symbol by company
name) to add a company to the list. Or, you can upload a *.SDF data
file that you've exported from Classic, Toolkit 5, or Stock Analyst, and
that company will be added to the Watch List with the date and current
price that are included in the SDF file. The SDF file will also be
available for download from the site as well, either from the Watch
List or from the "Watch List" folder in your club's File Storage area.
Just click the SDF link to open the file in your SSG software or to
save it to your desktop. This makes it easy to follow up on the stock
analyses that your club members present to the club, and track the
performance of stocks that you decided not to purchase at the time of
the original presentation.
When adding a stock, you can change the date from the default (today),
so you can start using the Watch List today by adding SSGs that your
club has reviewed in the last year, for example, and see how those
stocks might have performed. The Watch List calculates the Compound
Annual Return of each stock in the list using the original and the
current prices.
Your Watch List also includes a Buy link for each stock -- click the
link after you buy a stock that's on your list and you'll be taken to
the Buy Security page to record your purchase of that stock.
Any member of your club who has privileges to "Record accounting
information" in their "Edit Member Profile" screen can Edit or Remove
any other member's entries to the Watch List. Otherwise, members can
Add, Edit and Remove only their own entries.
Also, if you haven't yet noticed, your Club Accounting Online
expiration date is now listed on your club's main page after you log in
-- under "Subscriptions" in the bottom right corner of the page.
I'm sure there are some other ways that you can use the Watch List
feature, and we're open to suggestions for any additional functionality you'd like to see from it or from the rest of the site. We've already got some other new
features in the works to be released in the coming weeks!
Happy Investing,
Doug
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© Copyright 2006 ICLUBcentral Inc. All rights reserved.
Some ICLUBcentral products use the investing methodologies of BetterInvesting, a national nonprofit organization dedicated to investor education. BetterInvesting assumes no liability or obligations with respect to the investment education information or other content presented in the ICLUB Insider. For more information on BetterInvesting, please visit http://www.betterinvesting.org.
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