Do More Popular Stocks Produce Better Returns?

Company size, brand value, competitive advantage, and company reputation - do these popularity factors influence a share price?

David Harrell 14 February, 2019 | 8:19AM
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Piccadilly Circus London popular stocks advertising coca cola

In their new book, Popularity: A Bridge Between Classical and Behavioural Finance, Roger Ibbotson and three Morningstar investment researchers, Thomas Idzorek, CFA, Paul Kaplan, CFA, and James Xiong, CFA, propose a new asset pricing model, one they call the popularity asset pricing model. As their book title suggests, this new model is intended to connect classical finance and behavioural finance, and their research provides some fascinating insights into stock returns.

They define popularity in general terms as the “condition of being admired, sought after, well-known, and/ or accepted.” When it comes to investing, they note that popularity is comparable to investor preferences.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating Inc3,444.15 USD-0.08Rating
Apple Inc148.76 USD1.51Rating
Coca-Cola Co54.15 USD0.39Rating
Johnson & Johnson163.87 USD2.34Rating

About Author

David Harrell  David Harrell is the editor of ClearFuture.