NAIC

The National Association of Investment Clubs was formed in 1951. To be inclusive of individual investors, the organization changed its name to the National Association of Investors Corporation. NAIC has long championed four principles: 1) invest regularly regardless of market conditions--preferably a set amount each month; 2) reinvest all earnings, dividends and profits; 3) invest in growth companies--companies whose earnings are growing faster than the general economy; and 4) diversify by size and industry.

One of NAIC's founders, George Nicholson, developed a tool called the Stock Selection Guide, which enables a person to graph ten years of earnings per share, pre-tax profits, and price range. This tool, coupled with one's judgment about management, debt levels and competitive factors, enables one to get an idea of a possible price range for the next five years. Many individual investors and clubs have used the SSG and other NAIC tools to make informed, common-sense decisions about stock purchases.

NAIC publishes a monthly magazine called Better Investing. I have been reading this publication since 1982 and it has helped me understand the importance of growth. Steady growth of earnings, over time, drives the stock price up. So, when studying a company, I look first for a history of earnings growth.