Disagreement key to investor success

Attention investment-club members: If you want to improve returns, it may be better to disagree than to agree. That's one finding of a new study by Brown University sociologist Brooke Harrington.

Ms. Harrington surveyed more than 11,000 individuals in 1,245 investment clubs in 1998 and found that those with more-professional relationships did better. Conversely, clubs built around friends and family suffered. The report surmises that such groups are less apt to engage in constructive debate about investing decisions.

People in investment groups with family or friends "need to be extra vigilant to make it possible for people to disagree with each other," Harrington says. She recommends that decisions be made by secret ballot, allowing opinions to be given without revealing who holds opposing views.

"Good business has very little to do with liking each other and a lot to do with working together with respect, and that includes respectful disagreement," Harrington says. "It's a line all organizations have to walk - the danger of things getting too chummy."

Investment clubs are voluntary organizations of about 15 to 20 people who pool money to invest in the stock market. About 11 percent of American adults are involved in such clubs, according to the National Association of Securities Dealers.

(c) Copyright 2001. The Christian Science Monitor

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