Bridge over ocean
1 January 2000 Financial Analysts Journal Volume 56, Issue 1

Too Many Cooks Spoil the Profits: Investment Club Performance

  1. Brad M. Barber
  2. Terrance Odean

We report our analysis, using account data from a large discount brokerage firm, of the common stock investment performance of 166 investment clubs from February 1991 through January 1997. The average club tilted its common stock investment toward high-beta, small-cap growth stocks and turned over 65 percent of its portfolio annually. The average club lagged the performance of a broad-based market index and the performance of individual investors. Moreover, 60 percent of the clubs underperformed the index.

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