Beardstown Ladies
Encyclopedia
The Beardstown Ladies were a group of older women who formed an investment club
, formally known as the Beardstown Business and Professional Women's Investment Club, in Beardstown, Illinois
, USA.
Founded in 1983, the group achieved fame for their stock market acumen, claiming investment
returns of more than 23.4% per year from their inception through 1994. They received considerable attention in national media outlets, and authored a best-selling book, The Beardstown Ladies' Common-Sense Investment Guide, following it up with four more books.
In 1995, personal finance counselor and best-selling author (Personal Finance for Dummies, Investing for Dummies) Eric Tyson wrote an article in the San Francisco Chronicle
exposing the fact that this club did not have any documentation or audit
to back up their claimed investment returns.
In 1998, an article in Chicago
magazine asserted that the group's stated returns had included the new investments made by its members, and that when computed in conventional fashion, their annual rate of return
for 1984–1993 was actually 9.1%, considerably less than the 14.9% return on the S&P 500
during the same period. Outside auditor Price Waterhouse, hired by the club, confirmed the sub-par 9.1% annual rate for 1984–1993. The auditor also discovered the Beardstown Ladies' annualized return was 15.3% when all of 1983–1997 was included; this was better than the average stock fund at the time, but still worse than the S&P 500
return of 17.2% for the same period.
This revelation led to a class action lawsuit against their publisher (Hyperion
, a division of Disney
), which settled the case by offering to swap the books for other Hyperion books.
, the club still existed and was still investing.
Investment club
An investment club is a group of individuals who meet on a regular basis for the purpose of pooling money and retail investing. The invested sums can be $30 to $100 per month. For certain type of club pooling money is not mandatory...
, formally known as the Beardstown Business and Professional Women's Investment Club, in Beardstown, Illinois
Beardstown, Illinois
Beardstown is a city in Cass County, Illinois, United States. The population was 6,123 at the 2010 census. The public schools are in Beardstown Community Unit School District 15.-Geography:Beardstown is located at...
, USA.
Founded in 1983, the group achieved fame for their stock market acumen, claiming investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
returns of more than 23.4% per year from their inception through 1994. They received considerable attention in national media outlets, and authored a best-selling book, The Beardstown Ladies' Common-Sense Investment Guide, following it up with four more books.
In 1995, personal finance counselor and best-selling author (Personal Finance for Dummies, Investing for Dummies) Eric Tyson wrote an article in the San Francisco Chronicle
San Francisco Chronicle
thumb|right|upright|The Chronicle Building following the [[1906 San Francisco earthquake|1906 earthquake]] and fireThe San Francisco Chronicle is a newspaper serving primarily the San Francisco Bay Area of the U.S. state of California, but distributed throughout Northern and Central California,...
exposing the fact that this club did not have any documentation or audit
Audit
The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, but similar concepts also exist in project management, quality management, and energy conservation.- Accounting...
to back up their claimed investment returns.
In 1998, an article in Chicago
Chicago (magazine)
Chicago is a monthly magazine published by the Tribune Company. It concentrates on lifestyle and human interest stories, and on reviewing restaurants, travel, fashion, and theatre from or nearby Chicago. Its circulation in 2004 was 165,000, larger than People in its market...
magazine asserted that the group's stated returns had included the new investments made by its members, and that when computed in conventional fashion, their annual rate of return
Rate of return
In finance, rate of return , also known as return on investment , rate of profit or sometimes just return, is the ratio of money gained or lost on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or...
for 1984–1993 was actually 9.1%, considerably less than the 14.9% return on the S&P 500
S&P 500
The S&P 500 is a free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks actively traded in the United States. The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock...
during the same period. Outside auditor Price Waterhouse, hired by the club, confirmed the sub-par 9.1% annual rate for 1984–1993. The auditor also discovered the Beardstown Ladies' annualized return was 15.3% when all of 1983–1997 was included; this was better than the average stock fund at the time, but still worse than the S&P 500
S&P 500
The S&P 500 is a free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks actively traded in the United States. The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock...
return of 17.2% for the same period.
This revelation led to a class action lawsuit against their publisher (Hyperion
Hyperion (publisher)
Hyperion Books is a general-interest book publishing part of the Disney-ABC Television Group, a division of The Walt Disney Company, established in 1991. Hyperion publishes general-interest fiction and non-fiction books for adults under the following imprints: ABC Daytime Press, ESPN Books,...
, a division of Disney
The Walt Disney Company
The Walt Disney Company is the largest media conglomerate in the world in terms of revenue. Founded on October 16, 1923, by Walt and Roy Disney as the Disney Brothers Cartoon Studio, Walt Disney Productions established itself as a leader in the American animation industry before diversifying into...
), which settled the case by offering to swap the books for other Hyperion books.
, the club still existed and was still investing.