Club members learn and earn. SMART INVESTING

THE 20 members of the ``Prosancons Investment Club'' of Moscow, Idaho, know there is money to be made in the stock market. The club, organized in 1969, consists of women, each investing $20 a month. As of August of this year, the club owned shares of 14 stocks worth more than $71,000 - thus realizing a gain of almost $17,000 on an outlay over time of $54,000. ``The good thing about investment clubs is that the members learn a lot of useful information - and that over time they can show solid earnings based on dollar cost averaging,'' says James L. Fraser, of Fraser Management Associates in Burlington, Vt. ``And if you have one or two eager beavers in a club, it's amazing what you can come up with,'' he says.

Mr. Fraser, a chartered financial analyst, prefers domestic US companies that are slightly offbeat, or - in the case of overseas companies, major companies in countries that are not typically traded on the market, such as Telef'onica, in Spain. Telef'onica is Compan'ia Telef'onica National de Espana, Spain's leading telecommunications company.

Despite the stock market plunge a year ago, investment clubs continue to flourish. Some 7,100 clubs, for example, belong to the National Association of Investors Corporation, based in Royal Oak, Mich. The NAIC clubs have about 135,000 members, down only sightly from before the 1987 drop. But many of those ``lost'' members are in fact corrections made on a master computer list, adjusted when the association upgraded its computer process, according to Thomas E. O'Hara, NAIC chairman.

Mr. O'Hara says the association three basic principles for its members:

1.Invest regularly over the course of one's lifetime.

2.Reinvest earnings.

3.Pick companies that are likely to do better than the averages.

O'Hara says the NAIC recently reviewed 100 or so clubs at random, spread out over the membership. ``The average club,'' he says, ``was within 10 percent of their high from a year ago. The average dividend income was up 7 percent.''

The Idaho club is an example of how club members can seek out a small but profitable group of companies. Its performance was good enough to get it coverage in the October issue of Better Investing, the official monthly publication of the NAIC. The club listed 14 stocks, including such blue-chip issues as Boeing, IBM, Johnson & Johnson, Sara Lee, and Kmart. But some lesser-known companies included Pall Corporation, Genuine Parts, Ionics, and V.F. Corporation.

``I like to discuss undervalued stocks that are off the beaten path,'' Fraser says. He writes a column for Better Investing and admits to being a market contrarian. Finding such companies is not all that hard, he believes, as long as the investor is willing to do the necessary legwork, such as scouring market reports and reading as much as possible in financial publications.

Education is the key to sound investing, says Kay Shannon, director of communications at the American Association of Individual Investors, based in Chicago. Whereas the NAIC is club oriented, the AAII is individual-oriented, although some AAII members do group together on an informal basis, Ms. Shannon says. But the AAII, she says, considers itself ``strictly educational. We position ourselves between Money magazine and a college course'' on finance, she says.

The AAII Journal is published 10 times a year. Unlike the NAIC's Better Investing, it does not carry advertising. And the AAII is not primarily geared to the stock market: It deals with all forms of investing, including collectibles, the futures and options markets, and bonds.

The AAII also has certain investment principles that it recommends, Shannon says. These include:

Long-term investing.

Investors should not try to ``time the market'' for gain. Rather, she says, they should stick with day-to-day, month-to-month dollar cost averaging for purposes of consistency.

Investors should plan their investment strategy based on their individual needs and situation, which will vary greatly from person to person. They should diversify.

And most important, she adds, they should continue to diversify after they retire, rather than just invest in the bond market.

Members of both groups tend to be successful at investing for themselves. Mr. O'Hara of the NAIC notes the average club member has $2,500 to $3,000 in his investment club portfolio. But members also have about $109,000 in their private portfolios. In other words, he suggests, they use the information from their club meetings and private study to build their personal portfolios.

And AAII investors have personal portfolios averaging at least $200,000 per member, Shannon notes.

Obviously, for the ``average'' - and in particular, new - investor, a person is not going to build such a substantial portfolio over a short period of time. That's where dollar cost averaging and consistent investing come into play, O'Hara says. ``We think there's a desperate need to let people know that if they are careful, and buy good-quality stocks over time, they are going to do very well.''

To obtain information about either national investment club, and chapters in your area, contact either the American Association of Individual Investors, 625 North Michigan Ave., Chicago, IL 60611, or the National Association of Investors Corporation, 1515 E. Eleven Mile Rd. Royal Oak, MI 48067.