It seems like your problem is not with the intricacies of the unit
systems, it's with the fundamentals of investing.

-----Original Message-----
From: club_cafe-owner@bivio.com [mailto:club_cafe-owner@bivio.com] On
Behalf Of Eric Dobbs
Sent: Friday, July 29, 2005 10:29 AM
To: club_cafe@bivio.com
Subject: club_cafe: Re: Explaining Units Owned to members?

Scott McVicker wrote:
> I always explain it in terms of a mutal fund.

I think the problem with explaining it in terms of a mutual fund is that
most folks don't really understand how mutual funds work either. Here's
the story I tell:

"You paid in $100 in 1998. Then the stock market crashed around 2000
and your $100 bucks worth of stocks turned into $50 bucks worth of
stocks. That's the risk of investing in the market. Around that time a
new member joined and paid in their $100. At that point, you owned $50
and they owned $100. You invested before the crash and they invested
after. Now that it's 2005 and the market has recovered a bit your $50
bucks of stock has grown to around $63 and their $100 bucks worth of
stock has grown to $125. I know you both paid in $100 bucks, but in the
market as with life, timing is everything."

Hope that helps.
-Eric

Well yes, that is probably a factor but our mission as a
club is learning. But thanks for your gracious advice,
John.

Scott, I'll try your analogy. The group seems to do well
with analogies.

John Medio (john@gewarges.com) wrote:
> It seems like your problem is not with the intricacies of the unit
> systems, it's with the fundamentals of investing.
>
> -----Original Message-----
> From: club_cafe-owner@bivio.com [mailto:club_cafe-owner@bivio.com] On
> Behalf Of Eric Dobbs
> Sent: Friday, July 29, 2005 10:29 AM
> To: club_cafe@bivio.com
> Subject: club_cafe: Re: Explaining Units Owned to members?
>
> Scott McVicker wrote:
> > I always explain it in terms of a mutal fund.
>
> I think the problem with explaining it in terms of a mutual fund is that
> most folks don't really understand how mutual funds work either. Here's
> the story I tell:
>
> "You paid in $100 in 1998. Then the stock market crashed around 2000
> and your $100 bucks worth of stocks turned into $50 bucks worth of
> stocks. That's the risk of investing in the market. Around that time a
> new member joined and paid in their $100. At that point, you owned $50
> and they owned $100. You invested before the crash and they invested
> after. Now that it's 2005 and the market has recovered a bit your $50
> bucks of stock has grown to around $63 and their $100 bucks worth of
> stock has grown to $125. I know you both paid in $100 bucks, but in the
> market as with life, timing is everything."
>
> Hope that helps.
> -Eric