The fabulous stock market of recent years spawned a lot of investment clubs. Some 30,000 are currently listed with the National Association of Investors Corp. (NAIC), compared with 7,200 in 1992.

These clubs can be wonderful places to learn about stocks and mutual fund investing. But don't believe the propaganda that just-plain-folks are regularly beating the market. They're not.

That myth has two origins. First, one club's superior investment record, publicized in "The Beardstown Ladies' Common-Sense Investment Guide."

That best-selling book told how 15 women, ranging in age from 50 to 90, taught themselves how to pick winning stocks. If they can do it, why not you? (The Ladies are no longer publishing their investment record.)

Second, the NAIC itself which loves to make it sound as if everyone's a Wall Street genius. According to its glowing reports, 43 percent of its registered investment clubs equaled or beat the stock market averages last year.

But there's a teeny-tiny problem with that statistic. Only about 7 percent of the investment clubs report their results to NAIC. Those that do are competing for the title of "club of the year" (as the Beardstown Ladies were).

Obviously, clubs with mediocre results won't bother to report. A better reading of NAIC's "statistic" is that, of the sliver of superior clubs in any year, less than half beat the market.

Furthermore, it would be unusual for the same clubs to be in that top sliver year after year. Beating the market is mostly luck.

This is not a beef against investment clubs. They're useful, interesting, educational and fun.

Clubs are helping people especially women learn to trust themselves with financial decisions. Nearly 42 percent of the NAIC-registered clubs are entirely female. Most of the rest are co-ed.

I like investment clubs, which is why I'm so bothered about this fake claim that amateurs regularly beat the pros. You might feel like a failure if your club doesn't do as well.

But even professional money managers find it hard to beat the market over the long run. That's not even a sensible goal. You're a success if the club teaches you what investing is all about.

If you're thinking about starting a club, read "The Beardstown Ladies" (Hyperion paperback, $10.95). Then gather some friends, and friends of your friends, to talk about it.

You're aiming for 10 to 20 people who can afford to share any setup fees (perhaps $100 to $300), occasional expenses (the annual audit, NAIC materials), and monthly investments (usually $25 to $50).

Once the group is committed, join the NAIC (annual dues: $35 plus $14 per member; (248)583-6242) and buy its book, "Starting and Running a Profitable Investment Club" ($10).

You'll also find information on its Web site: www.better-investing.org.

Members should write themselves some rules. Do decisions on stock transactions have to be unanimous? Will you veto certain industries, such as tobacco? Will members be dropped if they miss a certain number of meetings? How are new members admitted and members cashed out who want to leave?

NAIC has general guidelines you might adopt, just to get started. You can modify them later.

Clubs usually spend the first months learning the language of investing, talking about investment philosophy, getting a stockbroker (or choosing a discount broker) and developing a list of specific stock ideas.

During that period, your investment kitty will gradually build. When you're ready to buy your first stock, you'll have something to work with.

Club members all research stock ideas and present them at regular, monthly meetings. When the club makes a buy, one member follows the company and makes reports. Some clubs buy mutual funds, too.

Profits are usually reinvested. Clubs sometimes bring in speakers to discuss certain industries or investment techniques. You all learn how to use information sources Value Line stock reports, financial publications and the Web.

In the course of buying, selling and talking, everyone learns. Losses are perhaps the best teacher. How do you handle it when your stock declines?

The club's own kitty may be small, but members put the lessons to work in their own accounts their inheritances or retirement funds. That's where the real work begins.

Debit card risks

Do you or don't you want to shop with a debit card? In the past two weeks, these cards have become safer to use, thanks to changes announced by MasterCard and Visa. Nevertheless, they pose some risks that credit cards don't.

A debit or cash card looks like a credit card. It usually carries a MasterCard or Visa logo and is accepted wherever those credit cards are. It's also your ATM card.

But when you use a debit card to make a purchase, you're not buying on credit. You're paying cash. The merchant will take the money directly out of your bank account.

Banks across the country have been issuing debit cards unsolicited, as replacement for regular ATM cards. Their motive is money. Every time you buy something with a debit card, the merchant pays the bank 1.4 percent to 2 percent of the item's price, according to the trade publication Debit Card News.

You face two risks with debit cards:

(1) You may not realize you have one. Because of the MasterCard or Visa logo, you might believe it's a credit card.

When you shop with the card, wrongly believing you're buying on credit, you are inadvertently draining your bank account of cash.

If you then write some checks to pay your bills, those checks will bounce costing you bounced-check fees along with a lot of ill will.

The banks are largely to blame for this problem. Many mail out debit cards without clearly telling people what they are, how to use them, the risks and the fees.

For a free explainer, get "Shopping with Your ATM Card" from MasterCard at (800) 999-5136. For a warning sheet on the Web, from the U.S. Public Interest Research Group, go to www.pirg.org.

(2) A thief may get your name and debit card number from a restaurant receipt, or perhaps by stealing your wallet. The card can then be used to order goods by mail, up to the limit of your bank account and credit line.

Under federal law, however, you don't have to pay any more than $50 of the loss, as long as you tell the bank within two business days of discovering the fraud. If you wait 60 days, you'll owe $500 of the loss.

Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington D.C. 20071-9200.

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