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

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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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Amazon.com Inc3,118.21 USD0.64
Apple Inc114.64 USD0.69
Coca-Cola Co53.33 USD1.23
Johnson & Johnson143.88 USD0.01

About Author

David Harrell  David Harrell is the editor of ClearFuture.

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