The Investment Club 

Just a few years out of the University of Washington, a dozen fraternity brothers decided to start an investment club. This was in the late stages, 1999, of the infamous dot.com bubble when the Nasdaq Composite index rose about 85.6% in 1999 alone. 

We put in $50 per month. That small seed gave us a reason to discuss our quarterly stock selections. What should we buy, hold, and sell? Although none of us were investment advisors, it provided us a reason to stay connected.

One of my infamous recommendations, which was approved by the club, was JDSU. Then, the dot.com bubble hit. The Nasdaq Composite index peaked at 5,048.62 on March 10 2000. It dropped roughly 78% from its peak by October 2002. It took approximately 15 years for the Nasdaq Composite to reclaim its prior high from the March 2000 peak (finally closing above that level in April 2015).

The JDSU stock, among many others, collapsed. JDSU’s dramatic collapse went from $153+ to under $2. As a matter of fact, we would have received far more value buying beer, enjoying the beer, and returning the cans for deposit.

We started to question ourselves, whether the viability of this investment stock club was gonna work. But we figured it was only 50 bucks a month and it’s probably better to buy stocks when they’re low rather than high. So we kept plugging along, and we kept waiting for our investment selections. 

What about Online Books? 

Shortly after the .com bubble, one of our fraternity brothers suggested, perhaps we should buy that Seattle company that sells books online. At that time, there were serious questions whether or not this company would survive because they had significant debt and no profits. 

With additional funding each quarter, we purchased some other reliable stocks, such as Starbucks and Facebook, which rounded out the portfolio, but nothing seemed to quite beat that online book investment. In fact, the online book stock has grown so much that we realized we will never have to put more money into this fund ever again.  Yes, that online book company is Amazon, and it has been quite the stock selection. and we have not put money back into the fund for over 15 years.

We now only have 7 stocks. Amazon has had over a 4,300% return, Microsoft 3,200% return, Meta (Facebook) 1,900% return, AMEX, Costco, Starbucks, Meta have 4x+ returns, the weakest one is solid double with Disney.

The Annual Investment Conference 

25 years ago, we decided that we should start doing an annual investment conference. This is a great opportunity to see everyone in person and sometimes, coincidentally, catch a Husky football game. The number on our Husky uniforms are for the 25th trip together.

As our Amazon stock has grown over the years, we have expanded our investment conferences outside the northwest and traveled to locations, such as Arizona, Nashville, Austin, and Mexico.

This year we were in Madison, Wisconsin at the University of Wisconsin, and somehow we ended up at the Husky game. We were greeted with snow flurries, and another upset road loss for the Huskies. We have a losing record when we go to the games. So, we have now said that it is no longer an option to go to a game during our investment conference weekend.

But what has been so amazing is the story of us being together as friends. If we did not set the foundation and take some risk 25 years before, it's probably unlikely that I would have been able to stay connected with these great guys. I always appreciate catching up with the boys.

And of course, somebody is always going to make some legendary comment or action that will be remembered for years. 

The Moral of the Story 

Here are a few lessons that our investment club has taught me.

1. Create mechanisms to invest for the long-term, and minimize opportunities to sell. We have basically told everyone, don’t plan to get your money out until you are no longer breathing.

2. Investing with others is more fun; because it’s not just your money you are winning and losing. 

3. Make time to meet in person with your club, at least annually. Make it a habit. You know you have created a great habit when your friends and family are asking when is your next trip. 

4. Don’t take yourself too seriously in the process. Recognize that there’s going to be mistakes and the team is more important than the individual. Remember, have fun, life is short.

5. Finally, remember that relationships are more important than money. If all of our decisions were JDSU, we probably would not have continued. But fortunately, our collective wisdom to make some good decisions have led to the benefits of long-term growth and more importantly lasting relationships.

My favorite part is simply hanging out with these successful guys once a year. Always great to be with the fraternity brothers. 

Thank you, brothers for helping create a legendary experience every single year.

40 Accounting Update - Hiring Tax Manager

We are hiring a Tax Manager to start in January.

We are adding a 3-4 year experienced tax senior who is interested in becoming a Tax Manager in our flexible work environment at 40 Accounting. This can be remote or local in the Portland Metro area. If you know an aspiring leader, who happens to be stuck at a larger tax firm, desires short and long-term incentives, this is a great opportunity. Please forward this email to them.