Stockmarket figures just don't add up for Beardstown Ladies

A CHERISHED fantasy of America's share-owning democracy - that amateur investors can be as savvy as the professionals - has just come crashing down with an apology from the good ladies of Beardstown, Illinois, that they made a mistake, writes Mary Dejevsky.

The Beardstown Ladies, average age 70, gained a reputation over the years for a commonsensical, mid-Western approach to small investment that claimed returns competitive with, and often superior to, those of the big stockbrokers.

The 14 members of the Beardstown Business and Professional Women's Investment Club devised a recipe for "stock-picking" that, according to their calculations, yielded a 10-year return on investments of more than 23 per cent. That compared with a 12 per cent increase in the Dow Jones Industrial Average over the same period.

The professionals checked the figures. Alas for the ladies, their claim did not add up. The professionals found that the real return over the relevant period, the 10 years to 1993, was 9.3 per cent.

Now, Betty Sinnock, the club's treasurer, has issued an apology: "The Ladies were very concerned that the public would think we had purposely misrepresented results in any of our books," she said in a statement. "We shared this original rate of return in good faith and are terribly sorry for the error and the confusion it may have caused."

Perhaps the Ladies should not be too distraught. Their 23 per cent yield did happen, in 1991-92, and according to a professional audit by Price Waterhouse, their rate of return for the 14 years of their club's existence has been 15.3 per cent: respectably in line with mutual fund yields over the same period.