TICN In The Press: February 12th, 2003

"Clubbing Together to Beat the Market" by Barry McCall
The past three years have not been kind to the majority of equity investors. Fist came the bursting of the dot.com bubble and the end of the so-called new economy. Then came the consequent near collapse of the telecommunications giants, such as WorldCom, and a welter of accounting scandals affecting companies like Enron and Tyco.

And hardly had investors time to recover their collective breath, then talk of war in the Middle East sent stocks tumbling again.

However, it is not all doom and gloom and a growing number of Irish investors have been profiting quite handsomely from equity investments over the past few years.

Founded in 1999, the Investment Club Network (TICN) has been helping groups of small investors throughout the country to play the markets and win.

TICN sets up investors clubs of 20 members in towns and villages around Ireland. Membership is limited to 20, as that is the maximum allowed by law for a partnership. Each member deposits 100 per month in the club bank account and the money is then used to make investments in U.S. equities

The clubs aren't limited to buying and selling shares, however. They also become involved in selling options on their shareholdings thus developing an income stream additional to the normal dividends and capital appreciation that investors usually seek.

"The concept grew out of an investment seminar I attended in Hawaii about eight years ago," says TICN founder Owen O'Malley. "This was attended by some of the world's leading investors and they passed on the benefit of their experiences over five days, I came back with the idea of setting up an investment club. I started by setting up one here in Donegal and we now have more than 200 clubs with almost 5,000 members around Ireland."

When a club is established members receive training in various key aspects of equity trading - principally picking the right stocks to buy.

"We train club members in how to identify the right stocks to buy," says O'Malley. "Companies invested in must be fundamentally sound with little or no debt and an excellent track record over the previous eight years. They must also be in industries which are experiencing growth and have a solid management team. We also train our members in how to identify the true value of companies, price support and resistance points and up to 25 different strategies for investment."

One of the most interesting aspects of the investments clubs is their ability to "collect the rent" on their investments as O'Malley puts it. "About 95 per cent of investors just buy and sell shares, they never look to collect the rent on them," he says.

"Our clubs look to the Chicago Options Exchange for this. Using that exchange they can look to see if dealers are looking to buy options in shares they hold. This might involve the dealer agreeing to buy an option which will allow them to buy shares currently valued at $9 for $10 in one month's time. They will do this because they might believe that the shares will be worth more than that at the time.

"By using mechanisms such as this our clubs have been making annual trading profits of up to 50 per cent."