Too Many Cooks Spoil the Profits: Why Investment Clubs Dont Work

Abstract (Via Berkeley)

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.

Introduction (Via Berkeley)

Investment clubs serve many useful functions: They encourage savings. They educate their members about financial markets. They foster friendships and social ties. They entertain. Unfortunately, their investments do not beat the market.

Click Here To Read About How Most Investment Cubs Under perform Markets

About Miguel Barbosa

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30. October 2009 by Miguel Barbosa
Categories: Curated Readings, Finance & Investing | Leave a comment

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