Should You Seek or Shun the Most Popular Stocks?

    by Mark Hulbert

    Popularity is one of those traits whose desirability in the investment arena is difficult to assess without a cold hard look at the facts.

    On the one hand, some believe that a stock’s popularity is a good thing, on the theory that whatever factors have convinced so many advisers to recommend a particular stock should make it a better bet than the stocks that no one is recommending.

    On the other hand, contrarians argue that popular stocks should be avoided; if given a choice between two stocks with similar financials, they would prefer the less-popular one, on the assumption that it has not yet been discovered. Of course, often there are no such clear-cut choices.

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    → Mark Hulbert