Beardstown Ladies Overstated Gains
CHICAGO (AP) _ The silver-haired Beardstown Ladies, who prided themselves on their homespun wisdom about investing, didn’t have such a golden touch after all.
After a month of number-crunching, the women who earned fame on Wall Street with two best-selling books and claims of a 23.4 percent return on their investments over 10 years admitted Tuesday that the rate was actually far lower.
The actual rate _ 9.1 percent _ didn’t even keep pace with the broad stock market, with dividends reinvested.
``I guess we were a group of naive senior citizens who just felt real good when the computer gave us that return,″ said Betty Sinnock, the longtime treasurer of the Beardstown Business and Professional Women’s Investment Club. ``The Beardstown Ladies are just really, really sorry.″
Sinnock, 66, attributed the mistake to a computer input error _ probably her own.
The women formed their investment group in 1983 in Beardstown, a small town in west-central Illinois about 40 miles from Springfield. They became well known in 1995 with ``The Beardstown Ladies’ Common-Sense Investment Guide.″
The women _ average age 70 _ thought the 23.4 percent annual return reported was for the 10-year period between 1984-93. But that rate only applied to a two-year period for 1991 to 1992, Sinnock said.
The women had not added their club dues to the returns, as they originally suspected, she said.
According to the accounting firm Price Waterhouse, which audited the club’s books, the overall average annual rate of return for the club from its inception through 1997 was 15.3 percent.
The rate of return from 1984-1993 was 9.1 percent, well below the 15 percent return of the overall stock market, with dividends reinvested, over the same period.
Club members say the error is embarrassing.
``It’s been a very rough time, but I guess when people got so nasty we felt like it was better to find out what we actually had,″ Sinnock said.
When she says nasty, she’s referring to Shane Tritsch, the managing editor of Chicago magazine whose article eventually led to the mistake’s unearthing.
``They’re delightful people, but that’s irrelevant,″ Tritsch said. ``They’re offering a formula for ultra-safe investing and modest capital appreciation, but yet they sold over a million books predicated on the notion that they had stomped the market by a 2-to-1 margin.″
Never mind that he’s been called a grandma-basher. It’s that very twinkly-eyed image that led many to believe them, he said. He knows. He’s had lunch with them.
``These are grandmothers and great-grandmothers. What could be more trustworthy than a grandmother?″ Tritsch said. ``Maybe that made the press a little less vigilant.″
But while Tritsch has gotten hate mail, club members have received glowing cards and letters from people who remain taken with the down-home folksiness that made them popular guests on television shows.
Their first book alone sold more than 800,000 copies.
Bob Miller, vice president and publisher of Hyperion, which published the group’s investment guides, said the company would ship correction slips to bookstores and would correct future printings.
``We know how badly they feel about this mistake, and we are pleased they have been so forthright in correcting it,″ he said.
Even with the error and club members in failing health _ two have died since the club started _ they’ve started work on a new book.
``Nobody likes to make a mistake _ particularly not to have it across the nation _ but we needed to let it be known,″ said 70-year-old Carnell Korsmeyer, one of the group’s 14 remaining members. ``Now I hope we can move on.″