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Beardstown blunder
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March 17, 1998: 7:35 p.m. ET
Geriatric investment club, best-selling authors, admit to faulty bookkeeping
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NEW YORK (CNNfn) - The "Beardstown Ladies", the geriatric authors of five top-selling investment guides, Tuesday said a "computer input error" led them to overstate the return on investment that their books claimed.
"The Beardstown Ladies are distressed that there could be any inaccuracies in our financial figures," Club Treasurer Betty Sinnock said in a statement. "As a guide to sound approaches to investing, our books still stand."
In their first book, "The Beardstown Ladies' Common-Sense Investment Guide," they had claimed a 23.4 percent average annual rate of return on their investments from 1984 to 1993.
The group, citing calculations by Price Waterhouse LLP, said today that the actual annual rate of return was 9.1 percent during that span, about what an investor could have earned in a long-term bond.
The Ladies' publisher, Hyperion Books, said the errors were due to the calculation of two-year returns in 1991 and 1992, not ten year returns as they should have been.
The group said the 23.4 percent return was accurate only for "approximately" a two year period from 1991-1992.
The accounting firm also found the Ladies did not include dues --$4,800 a year -- when they calculated investment gains.
News of the error left some younger followers feeling cheated.
"I'm a little bit disappointed, I suppose, that it came to that because one nice thing the Beardstown Ladies accomplished was telling everybody that you can do it, that it is possible to invest prudently on your own, that you don't necessarily need the hand holding of a professional," Jason Kelly, editor of the Neatest Little Fund Letter, told CNN's "Moneyline with Lou Dobbs". "But, the cautionary tale in all of this is that it's not easy."
The Beardstown Business and Professional Women's Investment Club, as the organization is formally known, is a group of 14 women with an average age of 70 in Beardstown, Ill.
Their folksy advice, and up to now, steller returns, attracted quite a following.
Hyperion Books, the books' publisher, said they will print and send correction slips to all booksellers that have the Beardstown Ladies' books in stock.
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