In 1999, I joined an investment club comprised of fellow school teachers.

We used the service at Bivio.com to track our returns. On the company homepage, they list the most popular holdings among America’s investment clubs.  After thirteen years of accessing Bivio’s site, I noticed something interesting.

The most widely held stock by investment clubs is usually the biggest (or nearly the biggest) company in America.  More than one third of investment clubs are drawn to the same monster market cap stock.

Should you follow their lead? Perhaps not. 

According to a study by finance professors Brad Barber and Terrance Odean the average investment club underperformed the market by 3.8 percent from 1991-1997. Their love for market cap leaders could explain their lackluster performance.