An Interview with Legendary Investment Club Member “The Stache” – Part 1
I have been writing on the internet for 5+ years now, for various projects including Sneaky Falcon, as well as some previous and now defunct electronic music efforts. Through these projects, I have had the opportunity to interview up-and-coming musicians, entrepreneurs, CEOs, and many other unique characters.
However, it is a bit surreal to be interviewing my own dad, aka “The Stache” for a two part piece (continue reading part 2 here) chronicling his nearly 3 decades of experience in the Six Pack Investment Club. It was actually his idea to come share his wisdom and jokes. After all he’s done for me, including inspiring me to want to start my own investment club, how could I say no?
If you need a primer on what an investment club is, check out this article first. Also, note that any mention of stocks in this interview does not constitute an endorsement or recommendation to buy from The Stache, Sneaky Falcon Enterprises LLC, the Six Pack Investment Club, or anyone else. See our full disclaimer for more info.
Let’s get this started with a softball. Has anyone ever told you that you look a lot like Luigi from Super Mario Brothers?
Yeah, I occasionally get that (mostly from you and your sister, and your smart-ass friends).
I frequently get compliments on my stache from young men and women at random places. Maybe they mistake me for a hipster? Oddly enough, and much to my dismay, no one has ever confused me with Tom Selleck.
How long has your investment club been in existence and how long have you been participating?
The club was formed in 1989 by the original six members. After about 6 months, myself and another gentleman were invited to join the club. Since then, I’ve been a member for 28 years and running.
What kind of Yinzer hooligans do you all have in your club?
The club currently consists of eight members ranging in age from 25 to 89 years old. We are a very diverse group. Healthcare administrator, retired controller from a well-known hotel, project manager, borough manager, director of a non-profit professional society, bid manager for a transportation company, glazier (a skilled tradesman responsible for cutting, installing, and removing glass) and a petroleum engineer.
Some other former members were a pharmaceutical salesman, financial advisor, IT manager, construction material salesman just to name a few.
It’s this vast range of age and variety of backgrounds and experience that make for an always interesting discussion. I think the different perspectives are one of the club’s greatest strengths.
Now that you have us feeling all warm and fuzzy, let’s get to the numbers. Any financial figures you can share to give this interview some credibility?
We started with each member contributing $50 per month, and now the club is currently valued at over $368K.
As you can imagine, the returns have been up and down over the nearly 3 decades. Below you can see the club’s performance going back to 1999. Because we switched software, we have lost the ability to track all the way back to 1989.
Does the name “Six Pack Investment Club” come from your initial policy of requiring each member to chug six beers before voting on any investment proposals?
It’s funny that the club was named “The Six Pack Investment Club” because even though we started the club when most of us were still in our prime drinking years i.e. late 20s, it was not based upon drinking challenges such as chug a beer every time someone said the secret word “valuation”.
We initially held club meetings at each other’s house, and yes, tasty beverages were consumed during the meeting. As the years went by, we held meetings in buildings associated with a Church (not in the Church itself), and Borough Chamber Meeting Rooms, so we stopped the practice of consuming alcoholic beverages during regular meetings. The name comes strictly from the idea that there were six members that started the club.
At SFE our decisions drive us to chug a six pack of beers roughly a week after we make a pick. Does drinking the beer before you choose improve the performance?
Just checking… Time for some rapid fire questions. First stock you recall buying?
RPM International Inc., an Ohio based company who manufactures, markets, and sells specialty chemical products for industrial, specialty, and consumer markets worldwide. They have had 43 years of continuous dividend growth. Note- we sold the stock many years ago. Other early picks were AFLAC, Disney and McDonalds.
Oldest holding still in your portfolio?
AFLAC, purchased in 1989, followed by Pepsico, purchased in 1991.
Best performing stock you’ve purchased?
AFLAC and PNC.
Have you ever invested in anything you were later embarrassed to admit you put money into?
Oh sure, and we usually recount the ugly details of our poorest investment decisions at our annual Christmas dinner. Ironically, these bad decisions were usually made during or following these dinners after a few bottles of wine.
Some of the poorer choices were TWA and Lotus Notes. We bought these on a whim without any investigation or analysis and nearly lost our money, but in both cases we were lucky to get out of them when we did with minimal losses. So they become lessons learned; “Don’t make investment decisions with a buzz on, but probably more importantly, without doing your homework first.”
Most recent investment?
I’ll share our three most recent investments:
1.) IDEXX Laboratories Inc. (Ticker NASDAQ:IDXX) develops, manufactures, and distributes products and services primarily for the companion animal veterinary, livestock and poultry, dairy, and water testing markets worldwide.
2.) Kratos Defense & Security Solutions, Inc. (Ticker NASDAQ:KTOS) offers microwave electronic products; satellite communications; technical and training solutions; modular systems; and defense and rocket support services. The Unmanned Systems segment provides unmanned aerial, ground, and seaborne, as well as command, control, and communications systems.This is all a fancy way of saying that they make cool military drones and spying equipment.
3.) Qualcomm Inc. (Ticker NASDAQ:QCOM) who makes chips and software primarily for the communications segment worldwide. This last one, is a contrarian pick. The stock has dropped considerably since the beginning of the year due to lawsuits with Apple and it is struggling to acquire another company, NXP Semiconductors Inc. We are hoping that we got into it at a low point, but it carries a significant amount of risk with it.
Largest amount of money you have invested at once?
During the crash of 2008, we had employed a strategy of stop losses, to keep from having significant losses. As a consequence we had a lot of cash on hand to invest. It was not unusual to invest $10 to $20K at meetings following this period.
However, we never put it all in one stock. Instead we reinvested in the existing holdings that we believed in and some other companies that we thought were a good value at these lower prices.
Ever consider investing in instruments other than the stock market?
In our partnership agreement, it clearly states “The purpose of the partnership is to invest in the assets of the partnership solely in stocks, bonds and securities, for the education and benefit of the partners.”
We have never taken the time and effort to thoroughly understand the bond market, so we have only invested in stocks and ETFs.
It is usually in the parking lot after the meeting that we kick around other investment ideas. Everything from car wash facilities to novelty hats have been considered, but never acted upon by us as a group. An individual did take a stab at the novelty hat idea though.
Lastly, if the Six Pack Investment Club were a meme, what would you be?
That’s a tough question, therefore, I’ll offer these up for your consideration
Back to your experience with being in an investment club. What’s the single biggest thing you have personally gained over the last 28 years in this club?
There isn’t just one thing, so I’ll share three things:
- The value of investing early in life, on a consistent basis. Investing becomes a habit when you have peer pressure of a group of people expecting you to invest each month.
- Everyone brings a different perspective to the table. The old adage two heads are better than one applies. Ten heads working together as a team with the same goals can be difficult at times, but the results are generally even better.
- Investing can be fun with the right group of people.
We’ve been at this for less than 3 years and have threatened to break up or liquidate multiple times already, how have you kept the group together for so long?
We have actually had a club vote more than once over the years to decide whether to continue or not as a club. It takes work to keep a club going. We have resigned ourselves that some members contribute more than others, as is almost always the case in groups, but as long as there is interest and people contribute their money it’s OK.
People have come and gone over the years for a variety of reasons, whether it was to buy that mid-life crisis red corvette, to pay for a daughter’s wedding, or in the case of one of the original six members, he wanted the money to buy his first computer (remember we’re talking the early 1990s here), but you have to continue to vet new prospective members that share the same passion to learn and be successful at investing.
Finally, you have to have trust in your co-members, but a good partnership agreement and set of by-laws makes the emotional decisions such as voting a friend and member out of the club a lot easier if they are not participating in a set number of meetings per year or contributing financially, We have had to do that more than once, and because it was written and agreed to when each member joins the club, the split has always been amicable.
How have you dealt with that one guy in the group that always suckers everyone into terrible decisions? If you don’t know, then you likely are that guy…
We have had one of those guys in the club more than once. The difference is, we vote as a club, majority vote required, and despite vigorous and lengthy discussion, in the end, we all vote by our convictions, and therefore the majority makes the correct decision (except during those drunken Xmas dinners).
What is the best advice you can give a young investment club like us? Do better than “buy low, sell high” or “start while your young because of compound interest”
I have to admit I was going to answer “start while your young because of compound interest” but then I continued to read on.
I think I have answered this above. Do your homework, don’t invest on someone’s recommendation that shows up in your spam folder, or on gut feels. Invest regularly, especially when the market turns down.
And finally, the club has a favorite saying that we remind ourselves of when the markets are spiraling upward as they have been this year, and that is “Pigs get fat, but hogs get slaughtered”
The expression means that It pays to be greedy, but not too greedy—or else you’ll get into trouble. If you get too greedy like a hog, you can end up losing it all. It is always harder to decide when and what to sell than what to buy.
I’m totally stealing that saying! So, I hear you are an avid reader of the site.
This is true, I enjoy the content and the humor makes it enjoyable to read.
Gee thanks… Has Sneaky Falcon inspired you guys to do anything differently?
Not yet, but we’re always willing to learn something new when it comes to investing.
Can we expect a Six Pack Investment Club website anytime soon?
I wouldn’t hold your breath. There are hundreds of blogs and websites that can teach and entertain people a lot better than we can.
That didn’t stop us! Anyway, continue.
We are like an old ancient tribe of Indians, our stories are best handed down verbally from generation to generation (we are on our third generation in one case).
We have passed down to our children some of the things we discussed today, and it is gratifying enough to see them start a club of their own or invest individually and spread the word to their friends and through social media.
Huge thanks to the Stache for taking the time to answer all the team’s questions.
Now head on over to Part 2 of this Interview, where we’ll delve a little deeper into investing strategy, what running an investment club was like 30 years ago, and what the future holds for the Six Pack Investment Club!