The Story of the Birdstown Ladies
In 1983, 16 women, with an average age of 70, founded their Investors Club in Birdstown. With little knowledge of investing, these worthy ladies decided to learn how to manage their money.
The initial investment capital was . A little later the women began to add $25 a month to it.
Ten years later the club became known as the Birdstown Ladies. For six years it was recognized by the U.S. National Association of Investment Companies (NAIC) as a "star," the women members of the club were repeatedly invited to appear on television.
In 1994, the retired investors published a book, The Birdstown Ladies Guide to Sensible Investing: How We Bypassed the Stock Market and How You Can Too, which contained tips on buying stocks and, of course, cooking recipes. By 1998, the book had been translated into seven languages, and the number of copies sold reached 800,000. By the way, this book is still available on Amazon.
The Birdstown Ladies' returns, which are listed right on the cover of their book, averaged 23.4% per annum from 1984 to 1993, well ahead of the market. The growth of the Dow Jones Industrial Average over the same period was nearly half that, rising at 14.9%. Moreover, the ladies claimed that thanks to their advice such success .
The success story of the "Birdstown Ladies" caused a real boom - between 1992 and 1998, the number of investment clubs in the United States grew from 9,000 to 36,000. People believed that if retired women could make money in the stock market, they could do it too.
However, not everyone believed in the success of the elderly ladies. Journalists found that the figures in the book were overstated almost twice by including membership fees in the income. Later, Pricewaterhouse, a British accounting firm, found that the profitability of the Birdstown Ladies from 1084 to 1993 was below the market. The ladies responded by saying that they had not contributed to the income with membership fees, but had simply made a mistake when entering the figures into a computer program. Nevertheless, the reputational damage has already been done.
The story continued after The Wall Street Journal published reports from other auditors that the average return for retired investors from 1983 to 1997 outperformed the Dow Jones index and was 15.3%.
Reputational losses have not prevented further development of the club. By 2016, the Birdstown Ladies included 75% descendants of the founding ladies. The oldest lady at the time was 89 years old, the youngest a little over 30. The investment club still exists.
When selecting stocks, the Birdstown Ladies advise . In doing so, special attention should be paid to industry leaders and the company's debt load. For the ladies, Warren Buffett is a role model; they took their investing principle from his rules: "Invest in what we know and what we understand." For example, when a Walmart supermarket opened in their town, the ladies noticed that the parking lot near it was always full, while its competitor Kmart was not. That became a reason to buy Walmart stock.
Despite its provinciality, members pay a lot of attention to the financial performance of companies, such as . Only stocks of companies whose total debt is no more than one-third of total assets and whose profits have been growing steadily for five years are considered for purchase. The Birdstown Ladies see falling stock prices as a Black Friday sale, seeing it as an opportunity to buy good securities at a low price.
At the end of 2016, the club's investment portfolio contained stocks in 17 companies, including , Walgreens, Wolverine, Starbucks, and Buffett's Berkshire Hathaway Class B holdings. The value of the portfolio was estimated at .
In 2019, older ladies have slightly departed from their principles of buying only what they know, turning their attention to the "Chinese Amazon" - the technology giant Alibaba. And, as time shows, they did not go wrong.