Types of Investors

There are different styles and types of investors that exist in the stock market.  Investors use the stock market to build their investment portfolio so that they can see a long term profit that takes place over a long period of time. 

Someone who is just using the stock market to make money quickly for a short period of time is called a "trader".  Members of an investment group fall into the first category:  they are in the investment market for the long haul.
 
There are different types of investors that use different methods to analyze the market and the market conditions. 

These three methods of analyzing the market are:

Technical analysis.  This method of analysis is used by a "momentum" investor.  Technical analysis looks at the price fluctuations that occur in the stock market.  The investor bases the decision to buy or sell on what he feels the price will do next.

Fundamental analysis #1.  Fundamental analysis is used by the "growth" investor.  This type of analysis decides if a certain company is a good investment based on the earnings of the company, growth sales, and margins of profit.

Fundamental analysis #2.  A "value" investor uses this type of analysis.  This method of analysis is similar to the analysis that a growth investor uses but is slightly different.  A value investor takes a close look at those companies in the stock market that have a low value.  The investor looks at stocks that are currently cheap and low but that have the potential to make a good comeback.

Most investment clubs use the fundamental method of analysis to make most of their investing decisions. 

They find companies that are listed on the stock market that show good growth, profit, and earnings but that are still cheap to buy and haven't yet reached their potential. 

Members of the investment club buy this stock and hold on to it for several years so long as the fundamentals, as listed previously, continue to hold strong.  This type of investment strategy is called "buy and hold".

Getting an Investment Club Started

Finding Members
 
Once you have the basic information gathered together about why you should start an investment club, and the requirements that members should have, you're ready to take the first step towards officially starting your investment club. 

You'll need to find members to join your club and you can achieve in this a number of ways. 

If you have one or two friends who have shown a mutual interest in the stock market or bond market you can approach them to join your investment club. 

You can find other people who are interested in joining in your club by advertising in the newspaper or by posting notices on community bulletin boards. 

The important thing to remember is that you want to attract people who have an interest in learning more about the stock market while they invest small amounts of money.

You shouldn't be too concerned if the majority of the people who have expressed an interest in joining your club are all new to the stock market.  In fact, this can be a good thing that your club is composed of people who have no real expertise in the market. 
 
People who have prior experience with the stock market may quickly become frustrated dealing with amateurs. 

Don't be too worried about being part of a group of people that have no experience since there are many resources that are available to help you learn about investing and the process that you need to follow.

Prior to your first meeting with those people interested in joining your investment group you should provide them with information about the club.  This includes letting them know what the club is going to be about and how it should be run.