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Why most popular isn't most profitable

  • By Compiledstaff

Fame, it seems, is fleeting on Wall Street. A new study by David L. Babson & Co. shows that the most-popular stocks are often one-year wonders.

Babson defined "most popular" as those companies that had the highest price/earnings ratios - excluding those with depressed earnings or no earnings at all - during April of a given year.

Since 1982, if an investor had bought the most- popular stock each year, the 19 stocks overall would have earned 60 percent less than if the same investments had been made in the S&P 500 on the same dates. The most-popular stocks in a given year and the percentage change in the value of those stocks through May 1:

(c) Copyright 2001. The Christian Science Monitor

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