TICN (The Investment Club Network)

I've noticed that whenever somebody asks about investment clubs or TICN they are directed to the search function to look for older threads on the topic. The problem with this is that there is a lot of misinformation in those threads.

I'm going to go through the threads in search and pick out anything I feel needs to be commented on. I will link each thread before I start so you can read the posts in context. If anybody has any other questions about TICN or about my experiences, etc. feel free to ask. If you want to link a thread or post for me to comment on you can do that as well. If you want to disagree with anything I say that's fine also.

First a quick note about myself. I took the MMCP seminar 3 years ago and have been part of a club in the Munster area since then. I'm a 2nd year college student and I'm studying Financial Mathematics in UCC.

I have no interest in nor am I affiliated with TICN in any way. I neither gain nor lose anything from TICN's success or failure.

Re: Ticn

I’ll start with TICN(The Investment Club Network)- an uneasy feeling

While any education on company balance sheets and proper estimation of share values has to be good

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The MMCP gives no information on reading/understanding company balance sheets. All information about a company’s financials are taken from Valuelines.com. Basically, analysts at Valueline look at the company and write a one page pdf about them. The MMCP teaches you how to dissect these reports and decide if a company is a good investment.

I don’t know if it’s a ‘proper’ estimation of share value but it’s an estimation. The system uses 5 year highs, lows and EPS, then uses a projected EPS (from Valueline) to determine buy, hold and sell ranges.

One of them was told that TICN were using the "same system that the very successful Warren Buffet" of Berkshire Hathaway uses - I don't think so - Buffet is very conservative, invests for the very longterm, and only invests in businesses he understands - he does NOT mess about with covered calls, put options, short term trading and other whizzy stuff.

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You are right, it is not the same system as Warren Buffet uses, although some of his methods are used (i.e. invest in shares you understand). Warren Buffet does however ‘mess about’ with options and sometimes invests in ‘other whizzy stuff’, an example would be junk bonds which he invested in circa 02-03.

In fact I would argue that TICN’s methods are almost too conservative, some of the screens used, such as Beta and debt, may prevent you from investing in an attractive company.

Re: Ticn

TICN seems to view covered calls as a really easy way of making money with virtually no risk. I formed the opinion that they really don't understand the full implications of what they are doing.

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The MMCP course only gives a very basic education on covered calls, there is a separate seminar dedicated solely to covered calls available, the latest price is E260.

I will mention that the explanation I got there was better than the one I got in UCC about options, in fact some of my class (480+ LC points who are strong at math) don’t understand anything about them.

I will probably post more specifics about their covered calls system later.

I think that they are just misinformed and are spreading this misinformation. I checked out the discussion forums on their website and it was pretty dangerous stuff. I appreciate that the nature of a discussion forum is that anyone can post anything. But there was some guy posting what I considered to be rubbish in a very authoritative manner and no one was challenging or correcting him. Others seemed to regard him as inspired. At least on Askaboutmoney, if I post rubbish in an authorative manner, it will be challenged very very quickly.

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That forum has been removed from the website, probably due to lack of use. I don’t remember anything that was posted there so I can’t comment. You may very well be right though.

Re: Ticn

Just have this feeling that while many in it may be well-intentioned enthusiastic amateurs, there are some "inspirational" speakers from UK or US, and it smacks a bit of AmWay + HerbalLife with a bit of old time religion...
Some of their strategies seem to work - as long as the underlying shares keep rising - I don't really think those involved have had the chastising and educating experience I've had of seeing my shares fall every damm day for a year.

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These courses are aimed at well-intentioned, enthusiastic amateurs. I don’t get the AmWay + HerbalLife reference, it was probably before my time. Perhaps somebody could clarify for me.

The underlying shares don’t need to rise for some of the strategies. For example, rolling stocks and covered call strategies can be used when a stock is trading sideways.

I’m sure some will have the same experience eventually.

I am certainly uneasy, TICN take a shareholding in every club (and don't contribute) which is against stock exchange share club guidelines. I attended a hard sell information evening where they couldn't even tell people what the tax implications are for losses/gains, even though there is a publication from the Irish Stock Exchange!

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The supposed expert hadn't a clue and the founder has no background in investments. I strongly advised my wife and her friend to steer well clear.

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I haven’t read the stock exchange share club guidelines so I don’t know if TICN is violating any laws there. TICN takes a 5% share of the profits when the club breaks up.

The tax implications where briefly explained at the MMCP I attended when somebody asked, this was not covered very well though.

If by founder you are referring to Owen O’ Malley, who is the CEO of TICN, then he does have a background in investments. He was interviewed on Information TV, BSkyB channel 181, on a show called ‘Experts on TV’. Having met Owen I can tell you that he is a very nice guy and he knows what he’s talking about.

I thought the idea of taking a 5% equity stake in a club was interesting. There's probably some signaling going on there. I wondered why not just charge an annual membership fee.

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They take a 5% share of profits to pay the club co-ordinator, it also means that they have an interest in helping the club to succeed.

I don’t get the signaling reference.

They charge a monthly registration to use their website, it’s E150 per club. I’m not sure how much an individual subscription is.

The approach does seem to have a flavor of value investing, but that's about it

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I too get nervous when I hear of novice investors learning about options. Covered calls aren't a bad way to get income. I just think personally it's best to learn about stocks before learning about derivatives.

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I agree with those comments.

Re: Ticn

The idea of a covered call is strange - why would you see a call option if you know that the stock is going to decrease in value? Market sentiment may well send the stock going south well over the expiration date !( 3 weeks).

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You sell the covered call to trade the fluctuations in price without getting in and out of the shares.

Here’s an example, I’ve edited out the name just in case it’s against AAM policy, perhaps a moderator could clarify?

The red arrows indicate where you would sell, the blue where you would buy it back.

[broken link removed][broken link removed]

All well and good you say but how do you know when to do this?

You use the Bollinger bands (white), moving averages (red and yellow) and trendlines (white).

Watch the price as it moves off the moving averages and outside the Bollinger bands. If it is close to the resistance of the channel this is even better. When it gets outside the Bollinger band it is usually on a high volatility day, this means you will get more for the call premium. Here is where you sell the call.

Next you wait for it to pull back to the moving averages or the bottom of the channel, these often act as support, when it does find this support (i.e. the price stops falling and moves sideways or upwards) it is time to buy back the call. Again if it is a sideways day, volatility will be low and the premium you must pay back is deflated.

So looking at where it is now, we see a large gap up from the support of the channel, any sort of follow through in the next couple of days will push the price outside the Bollinger band, this is when we would sell the call. Unfortunately we are fairly far from the next out of the money strike price ($22.50) so the premium may not be large enough to trade this profitably.

Most of this is not covered in the MMCP but will be built up as you go along and get more experience.

One month covered calls are used because the time value of the calls decreases exponentially when you get within two months of the expiration date. A one year call on the other hand would have a very slow decrease in time value.

Re: Ticn

In my experience buy and sell the stock , use the Stochastic indicators as well as Bollinger bands,

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The MMCP will teach you how to use Money Stream, Balance of Power and Moving Averages.

The TICN website will teach you how to use stochastics, MACD, Wilder’s RSI, Bollinger Bands, ADX, OBV and Volume.

The Telechart software and website will teach you how to use Time Segmented Volume and linear regression channels.

Of course, a lot of that information is also available on investopedia.com.

Stock Market is very based on market sentiment - if a company is posting great profits and has great management may not mean that the stock is worth a buy due to negative market sentiment

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From a value investing point of view this is wrong. Read chapter 8 of the Intelligent Investor by Ben Graham, the parable of Mr. Market is fantastic. If there is a negative market sentiment about a strong company, making the price very undervalued, then that would be the ideal time to buy. Eventually, provided the company has continued success, the market will correct to a fair value. At least that’s the theory anyway.

Re: Ticn

You use the Bollinger bands (white), moving averages (red and yellow) and trendlines (white).

Watch the price as it moves off the moving averages and outside the Bollinger bands. If it is close to the resistance of the channel this is even better. When it gets outside the Bollinger band it is usually on a high volatility day, this means you will get more for the call premium. Here is where you sell the call.

Next you wait for it to pull back to the moving averages or the bottom of the channel, these often act as support, when it does find this support (i.e. the price stops falling and moves sideways or upwards) it is time to buy back the call. Again if it is a sideways day, volatility will be low and the premium you must pay back is deflated.

So looking at where it is now, we see a large gap up from the support of the channel, any sort of follow through in the next couple of days will push the price outside the Bollinger band, this is when we would sell the call. Unfortunately we are fairly far from the next out of the money strike price ($22.50) so the premium may not be large enough to trade this profitably.

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You're studying quantitative finance and yet it seems you're a believer in technical analysis? Do TICN encourage the use of charting? Of all the approaches to investing, most forms of technical analysis have been well and truely debunked. Not only in academic studies but the likes of Buffet, for example, claims he realized technical analysis doesn't work when he turned the charts upside down and got the same answer.

Re: Ticn

What does the club coordinator do? I thought that the idea of such a club was that decisions were made collectively - ideally unanimously but I guess that's not always possible once there is more than a single person invoved...

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The club co-ordinator is like a TICN representative as such - attends your club mtgs & gives guidance - answers questions on diff trading strategies etc. A god club co-ordinator is invaluable to any club. He takes a cut of the profits at the end of the 5 yrs (or sooner if the club ceases)

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This is all true, he also helps the club set up the paperwork and get an online account started. He helps get people set up with roles in the club; chairman, secretary, trader, treasurer, etc.

A good club co-ordinator is definitely invaluable to any club, in fact they may be the difference between a club failing or succeeding.

Yes; decisions are taken collectively. Usually there is a fairly unanimous decision but sometimes not. For example, in the chart I linked earlier my club decided to sell around the middle of December. I was against selling as it was still in a very healthy uptrend but there was a large profit (15-20%) and the rest of the club decided to sell.

Yesterday it went up 6%, luckily I own a LEAP in this company in my personal portfolio.

Also the clubs designated traders may be given permission to make trades between meetings if a suitable trade comes up.

Re: Ticn

You're studying quantitative finance and yet it seems you're a believer in technical analysis? Do TICN encourage the use of charting? Of all the approaches to investing, most forms of technical analysis have been well and truely debunked. Not only in academic studies but the likes of Buffet, for example, claims he realized technical analysis doesn't work when he turned the charts upside down and got the same answer.

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Yes; I am a believer in technical analysis. However, I also use fundamental research to find undervalued shares and technical analysis for entry/exit and covered calls. Please link to those studies as I would really like to read them. If you are refering to CAPM and EMH, then that has been well and truly debunked also. In fact, Warren Buffet describes CAPM as 'twaddle'.

There are some hedge funds which use purely technical analysis, such as James Simons' Medallion Fund. Net 35% annual returns since 1989, for a $5 billion dollar long-short fund.

'Renaissance uses computer-based models to predict price changes ...These models are based on analyzing as much data as can be gathered, then looking for non-random movements to make predictions...Renaissance represents a validation of the quantitative trading model and trades with such high-frequency that it (the Nova fund, specifically) accounts for over 10% of all the trades occurring on NASDAQ some days. It is worth noting that the Nova trades execute purely electronically on direction from a computer model.'

Due to his success, Simons is now one of the 75 richest people in the USA.

There have also been some papers on technical analysis, an example would be 'The profitabililty of momentum strategies,' by Jegadeesh and Titman, 1999, and 1993.

"This paper evaluates various explanations for the profitability of momentum strategies documented in Jegadeesh and Titman (1993). The evidence indicates that momentum profits have continued in the 1990's suggesting that the original results were not a product of data snooping bias.

The paper also examines the predictions of recent behavioral models that propose that momentum profits are due to delayed overreactions which are eventually reversed. ... Our analysis of post-hiding period returns sharply rejects a claim in the literature that the observed momentum profits can be explained completely by the cross-sectional dispersion in expected returns."

TICN do teach charting and encourage it if you are using strategies such as rolling, momentum or covered calls, etc.

However, the very first strategy they teach is Buy and Hold which they recommend the most.

Re: Ticn

RedJoker said:

If anybody has any other questions about TICN or about my experiences, etc. feel free to ask.

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I have no interest in nor am I affiliated with TICN in any way. I neither gain nor lose anything from TICN's success or failure.

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You invite "questions about TICN or about my experiences" but say that you have no involvement with TICN. Can you clarify what you mean please because this sounds a bit contradictory to me.

Re: Ticn

ClubMan said:

You invite "questions about TICN or about my experiences" but say that you have no involvement with TICN. Can you clarify what you mean please because this sounds a bit contradictory to me.

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Certainly, I probably stated this poorly. By involvement I mean that I do not benefit from TICN's success, etc. If people decide to attend the MMCP or not based on my posts it will make no difference to me. I just wanted to post my experiences for members here.

By "questions about TICN or about my experiences" I mean I will answer questions about the MMCP, the website, fees or anything else I know. By experiences I mean taking the MMCP and being in an active club.

I thought I should mention that I have no financial involvement with TICN because I knew it would be asked and it is an important point.

Re: Ticn

I’m going to go onto TICN get a very easy ride on RTÉ's "The Business"

I attended an introductory talk by TICN, and I can’t see how you can make money out of it. The idea is that you sjoin an investment club; all club members attend a training course (cost about 1000 euro) and then subscribe 100 euro per month to the club to buy shares. The club exists for 5 years and then winds up, distributing its assets to the members. There is a standing charge of 150 euro per month to the club for the analysis sheets and services from Valueline, the trader software, newsletter, etc. TICN also takes 5% of the shareholding in the club financed by the other club members, i.e. in effect a charge of 5% on your monthly subscription. So how can you make money? If TICN takes 5% of the subs and there is also a standing charge a club of 10 people would need its shares to grow at about 7% p.a. just to break even on the subscriptions / standing charge. To cover the cost of the training course you would need to gain even more. Increasing the number of club members will not offset the subscription / standing charge if your gains on the investments are low. A club with the max of 20 members would still need their shares to gain at least 5% p.a. to break even on subscriptions / standing charge. The TICN strategy includes the selling of options (i.e. covered calls) on the shares to gain a ‘rent’. So, you need both relatively high gains on the stocks and profitable option selling to make a profit. To be fair to TICN they did not hide these charges at the presentation I attended, but only one member of the audience picked up on this point, which would make me question the financial sophistication on the other potential club members. If people are not aware of the impact of costs on investment returns could you really trust them to select profitable shares? Anyone have any other experience / observations?

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The fee for the course is now E1295. There is also a money back guarantee on this if you decide you do not want to finish the course before lunch time on the Saturday.

Access to the website is still E150, or E7.50 per member. For this you get analysis sheets and services from Valueline, newsletters, loads of educational pieces and free webshops with Owen O’ Malley. Charts are not included, they must be bought separately. The online brokerage is free anyway.

The webshops are brilliant and are a great help when learning, they are interactive so you can ask Owen to look at stocks you are interested in and he will give his opinion on the charts.

Your mathematics is wrong here. A club would have to make 9% per annum for 5 years to break even.

The fees for an individual are 1295 for the MMCP and 7.50 a month.

1295 + (7.50 * 60) = 1745

5% of the profits go to TICN.

1745 / (0.95) = 1836.84

Therefore an individual will have costs of 1836.84 over 5 years.

The total amount invested comes to (100 * 60) = 6000

So an individual needs a share of 6000 + 1836.84 = 7836.84 to break even.

In the first year 1200 is invested, at a 9% return this comes to 1308.
In the second year 1308 + 1200 = 2508, at a 9% return = 2733.72
In the third year 2733.72 + 1200 = 3933.73, at a 9% return = 4297.75
In the fourth year 4287.75 + 1200 = 5487.75, at a 9% return = 5981.65
In the final year 5981.65 + 1200 = 7181.65, at a 9% return = 7828.

This is close to the 7836.84 figure need.

Obviously a 9% return is a huge percentage in fees to be paying. This does not include the cost of Telecharts or the meeting rooms.

Re: Ticn

Why pay anybody (other than a stockbroker and the taxman) when you can manage your own investment club and access all of the relevant resources for free? Neither TICN nor any other individual/organisation has exclusive access to information on stock market investing no matter what might be claimed or implied.

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TICN do have exclusive access to their system, to the webshops, to the 4x4 companies that they post on their website, to TICN clubs and to the options trade finders.

They also pay for access to Valueline.

The educational articles are available on the net for free however.

Re: Ticn

Why not just buy the ISEQ ETF - simple, effective, with stock specific risks nullified?

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An excellent idea. Warren Buffet once said that for 99% of investors index funds are the best option.

I would also diversify those funds across different markets, currencies, capitalizations and sectors.

ETFs, as you mentioned, are also a viable option but remember that both index funds and ETFs have their pros and cons.

Re: Ticn

RedJoker said:

TICN do have exclusive access to their system, to the webshops, to the 4x4 companies that they post on their website, to TICN clubs and to the options trade finders.

They also pay for access to Valueline.

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Be that as it may the Efficient Market Hypothesis would suggest that this in no way ensures that they are better able to decide when to buy low and sell high that anybody else.

Re: Ticn

ClubMan said:

Be that as it may the Efficient Market Hypothesis would suggest that this in no way ensures that they are better able to decide when to buy low and sell high that anybody else.

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This is very true and on this occasion I agree with the EMH. I mentioned earlier in the thread that the EMH isn’t necessarily true and there has been a lot written about this topic. [broken link removed] would be one example.

Re: Ticn

I did the TICN investment course last year - great course but I was not too enthused about joining a club and I am glad that I did not. There are a lot of stocks that TICN do not cover because theey are not "4X4" stocks!!! which to me is quite conservative. Another point being missed here is no matter what stock anyone has picked recently, would have suffered due to Bernake's (Federal Reserve) chairman reports about inflation rates hence since about May the Market has been extremely Bearish - okay so you can buy Put Options or sell short (which TICN do not favour yet are less expensive brokerage fees - but really was based on market sentiment and I believe not everybody could have guessed that that would happen. Last October to May I found Bullish , market since May is bearish, due to interest rate increases seem to be levelling off for now(CPI data seems to show this too) might start a Bullish run again.

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Personally I think that if you take the MMCP then you should definitely join a club. You will learn a lot more being a part of a club and having a good club co-ordinator then you will get from the MMCP.

Yes; you are right, it is very conservative.

TICN do not favour selling short because it is riskier, unlimited downside risk, etc. Also you need a portfolio of $25,000 and a margin account. There is a puts course available.

TICN data about clubs is very suspect .... Great course - but steer clear of clubs - the blind leading the blind - in my opinion . Of course Im no expert but when it comes to your hard earned money - do your own research, know the market sentiment, when to buy and when to sell ( online) and take you profits periodically ... that has been my experience....

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Initially everyone will be blind but hopefully some members will take the lead and bring the rest of the club up to speed.

Re: Ticn

RedJoker said:

By experiences I mean taking the MMCP and being in an active club.

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Are you saying that you are a member of an investment club that was set up under the auspices or guidance of TICN? If this is the case then surely you do have some vested interest since the performace of your investments presumably depends to some extent on TICN?

Re: Ticn

I'll move onto Investment Clubs now. If I've missed anything you think is important just point it out.

TICN run an MMCP Seminar (Making Money is Childs Play).

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It's 'Making Money with Careful Planning'.

This is intense & runs on a Fri eve, all day Saturday & all day Sunday.

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There is also the option to do it over 4 thursday nights.

Is there anyone who has done the course can give a verdict on the MMCP course in terms of...

- Worthwhile
- Very beneficial
- Outstanding
- Waste of Time (& money)
- "Went straight over my head"

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I found it very worthwhile and since I was a student it was free for me to attend. Also spouses can attend at half price. If you have a few teenagers it can definitely be worth the money.

None of it went over my head but some people did struggle with the covered calls part of the course.

Re: Ticn

ClubMan said:

Are you saying that you are a member of an investment club that was set up under the auspices or guidance of TICN? If this is the case then surely you do have some vested interest since the performace of your investments presumably depends to some extent on TICN?

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Okay, I think you're just nitpicking here but I suppose if they went bankrupt I wouldn't have access to their website, although to be honest I don't use it that much anymore.

However I doubt that will happen, particularly considering their fees, wouldn't you agree?