July 22, 2024
Investment

Frontier Investment Club is a 67-year tradition


If an investment club has lasted for 67 years, then it must be doing something right.

The Frontier Investment Club’s eight current members are keeping the decades-old tradition alive by following a formula that works for them. They pool their money, vote on whether to buy or sell the stocks they research, and have some fun along the way.

Call it a long-term investment in stocks and friendship.

“The investment club is not for us to get rich,” said Dan Wilson, who joined in 1987. “It’s to share ideas and learn about stocks.”







Frontier Investment Club

Dan Wilson places a hand on the Frontier Investment Club records book as members talk around his dining room table on Tuesday, April 30, 2024. The eight-member club meets monthly to buy and sell stocks as a group. The club has operated for 67 years. (Joshua Bessex/Buffalo News)




The Frontier Investment Club is based in Lockport. Each month, the club meets in one of the members’ homes, with the members taking turns as host.

Members split up the work of tracking and updating the group on stocks in their portfolio. And for each meeting, one member is tasked with presenting new stocks for the group to consider. They decide by secret ballot whether to buy or sell.

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But it’s not all business. The members build in time for refreshments and socializing, too.

The Frontier Investment Club is recognized as the oldest BetterInvesting-affiliated club in New York State. BetterInvesting is the public-facing name of the National Association of Investors Corp., a nonprofit organization that traces its roots to 1951 and promotes investor education.

How Frontier Investment Club started

The Frontier club’s 13 original members were all from Harrison Radiator, the manufacturer owned by General Motors. The club was founded in 1957 and filed paperwork to form a partnership five years later. One of the original members was still part of the club when he died in 2006.

Over its history, the Frontier club has had 50 different members. The eight current members – the club’s size has fluctuated – come from a variety of career backgrounds, including manufacturing, technology and finance. Wilson, the longest-tenured current member, is retired and formerly an owner of a fiberboard company.

Rich Scott, another club member, said the different perspectives make for good discussions.

“There’s no dumb question you can ask here, because you’ll get an educated answer from one of the guys,” he said.

They have seen the highs and lows that come with owning stocks. Wilson recalled the dot-com boom and bust cycle from a couple of decades ago.

“We rode it up,” he said, “and we rode it down.”

The current stock the Frontier club has held the longest: Amazon, which the club members bought in 2017.

The club members declined to share specifics of the dollars and cents of their current investments. But they say their stocks’ performance has roughly tracked the market’s results over time.

In other words, don’t look for the Frontier members to write a bestseller like the Beardstown Ladies, the investment club in Illinois that proclaimed it outperformed the market in a big way in the 1980s and 1990s. (A magazine investigation later determined that club’s returns were massively overstated.)







Frontier Investment Club

Gordon Smith, Dan Wilson, Rich Scott and Kevin Clark members of the Frontier Investment Club, talk at Wilson’s dining room table on Tuesday, April 30, 2024. The eight-member club meets monthly to buy and sell stocks as a group. The club has operated for 67 years. (Joshua Bessex/Buffalo News)




How they keep it going

Members of BetterInvesting-affiliated clubs are typically connected to each other through a common bond, such as friends, family, a house of worship or work, said Dennis Genord, director of education and chapter development for BetterInvesting.

Genord said the Frontier club deserves credit for keeping things going after all the original members were replaced over time.

“When they’re fortunate enough to go decades like that, the original members, they want to pass along what they’ve learned and how they’ve benefited,” Genord said. “Then it really comes down to, will that group have the chemistry needed to go the distance?” 

Genord said many BetterInvesting-affiliated clubs will limit the dollar amounts that members contribute on a monthly basis.

“It’s not meant to be like your 401(k), your primary retirement savings account.” (Frontier club members might put in $20 to $50 per meeting.)

But being part of a club helps members become better-informed investors, Genord said.

“These members are taking the learning from the club and using it to manage their own personal stock portfolios,” he said.

Genord said it’s ideal for investment clubs to keep their portfolio to no more than 15 to 20 stocks – sufficient for a diversified portfolio, but not so many as to swamp members with work.

And Genord said it’s important for people who are either forming or joining clubs to be aware of the responsibilities they are taking on, including the time commitment.

“They have to understand getting into this thing, it’s more than just the book club down the street,” he said. “You’re going to have fun, it’s social – but money makes everything serious.”

Scenes from a meeting

At a recent Frontier club meeting, with Sadie the dog making the rounds of the living room, the members gathered in chairs in a circle. They started the night with 11 stocks in their portfolio, a number they say keeps things manageable.

To research the stocks, members will read reports generated by Value Line, an independent research and financial publishing firm, for free at the public library. Other members draw upon the ample resources available online to gather information, too.

BetterInvesting magazine also offers tips on stocks to consider, which the members sometimes use. BetterInvesting has revealed its June/July issue will include Paychex as its “stock to study.” The human resources and payroll services firm was founded in Rochester by Tom Golisano, the billionaire who once owned the Buffalo Sabres.

The Frontier club members took turns sharing the latest news with the stocks they reported on, including Clorox, Tractor Supply and M&T Bank. Some read from notes on paper, others from their phones.

Gordon Smith noted Tractor Supply plans to keep adding stores. The company’s plans hit close to home: Tractor Supply has a new store under construction on Transit Road in Lockport.

“This is one we should keep,” Smith said. “This is a good stock.”

Smith’s late father was a member of the club, too. For a time, the two of them were members at the same time, giving them an activity they could do together.

When new members join, it is typically by invitation from a current member. A candidate will attend a couple of meetings as a guest. Then, at the next meeting, without the candidate present, the members vote on whether to allow that person to join.

Ronald Bechtold joined in 2007, through an invitation from Wilson. Their wives taught school together.

Bechtold remembers when he was in high school, he had a class where each student was assigned a stock to follow, to learn how the market worked. Decades later, he is again doing that kind of research.

His wife has become interested in the market, too, and they will talk about possible stocks for the club to invest in.

“I bounce stuff off her,” he said.

Bechtold said he’s learned a lot from the presentations, but he also enjoys the camaraderie. “They’re a really good bunch of guys,” he said.

Another member, Kevin Clark, presented two potential new investments to the group: Paycom Software, an online payroll and human resources software firm; and LKQ Corp., which supplies replacement parts for vehicles.

After the presentations, Scott collected the members’ orange paper ballots and counted them by hand on the carpet. Neither stock received the two-thirds majority of votes necessary for the club to buy it.

The only change the members agreed to make to their portfolio was to put a “trailing stop” on one of their stocks, Analog Devices. That meant if the stock fell below a designated price, the club would sell it, to protect its investment.

After nearly 90 minutes, the meeting was over. The members headed for the front door, going their separate ways until the next meeting.

As he was leaving, Wilson offered a thought about why the club has managed to last for decades, through the ups and downs of the market and changes in membership.

“The social piece is really, really important, ” Wilson said. “There’s a good mix of people in different industries. I think that’s very valuable.”



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