In the early months after the club's formation, it became clear that there should be some form of strategy in identifying suitable shares to buy, rather than purchasing 'blind' as a result of some comment in the papers. Our first step was to subscribe to Company Refs on a quarterly basis, in the CD format, and each member contributed £15 separately for the first subscription. This has been an enormous help to the club in providing all the financial background for UK based plcs., and we have continued to subscribe to it since.
Soon after, the club formed a sub-committee, which in practical terms consisted of about 6 members, who usually met about 1 week before the main members' monthly meeting. The sub-committee was principally set up to research a maximum of 4 companies put forward by members at the previous meeting, but as time went on, the sub-committee was given the full authority by the club's members to buy or sell any of the existing holdings, and if the majority of the sub-committee agreed, to purchase one of the companies put forward. However, time has again moved on - we are now in 2006, some 8 years or so since we started, and we no longer run the sub-committee system. All decisions are made by members at meetings, which is a much better democratic process in which all members can take part.
The club has several members who enjoy the research work - reports are written and distributed by the internet, and members are usually in a position to decide one way or the other at the main meeting. This system works very well, and it ensures that members knew what they are letting themselves in for!
Today, the club now deals with bigger figures, financially. Our purchases are usually for amounts of £5000 to £10000, and we are more selective as a group in our buying and selling procedure. The club continues to subscribe to CD REFs on a quarterly basis, and now by the use of Powerpoint and a projector, it fully explores its buying options at a club meeting with all members present, using CD Refs. The club adopts a sieve procedure, using trusted methods, and can identify a number of suitable companies - or so we think - to invest our accumulated wealth in. It works exceptionally well and we have unearthed some gems.
The main thing is - we have all learnt a tremendous amount about buying shares, the importance of ratios etc. and we see the market is starting to pick up again after an uncertain period. Our optimistic estimate of the FTSE 100 at the end of 2008? Well - we think it will break 6300 comfortably. You have to be positive and look on the bright side!
(updated 18 March 2008)