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Why the Most Popular Stocks Aren’t Always the Best Stocks

The most popular stocks aren’t always the best stocks, and investors in GameStop (GME) and Trump Media (DJT) have found out the hard way.

Apple AAPL Logo - Most Popular Stocks

Robinhood, a popular trading app that rapidly gained users during the pandemic-era bull run, maintains an index of the most popular stocks held by its investors.

The Robinhood Investor Index is weighted by conviction (portfolio percentage of each investor holding shares) and they track that performance against the Nasdaq. They don’t disclose the exact holdings, but they do offer a visual that depicts the relative conviction in their top 10.

According to the company, here are its 10 most popular stocks by percentage of ownership (based on our interpretation of the visual data above) among its users:

  1. Tesla (TSLA)
  2. Apple (AAPL)
  3. Amazon (AMZN)
  4. Nvidia (NVDA)
  5. Ford Motor (F)
  6. Microsoft (MSFT)
  7. Disney (DIS)
  8. Meta Platforms (META)
  9. GameStop (GME)
  10. Trump Media (DJT)

Not surprisingly, eight of the 10 most popular stocks among Robinhood traders are tech stocks, with Ford and Disney being the exceptions. That shows beginner investors are heeding Warren Buffett’s sage advice to “buy what you know.”


What many beginner investors may not know is that the most popular stocks aren’t always the best-performing stocks. Most on this list have performed quite well over the last year. GameStop is a major exception, down 53% in the last 12 months, while Ford and Tesla are also both underperforming, down 4% and 16% respectively compared to the S&P’s 22% return.

In fact, only five of the 10 stocks on Robinhood’s list have beaten the market in the past year, which makes you wonder why they’re so popular. (DJT is included as an outperformer, although that period includes the transition from a SPAC and should be taken with a grain of salt.). The answer is simple: most beginner investors buy stocks that they know have been doing well, but may not have the fundamentals to continue doing well.

Now, it’s true that the chart is very important—stocks that are trending upward tend to keep going in that direction for a while. And despite recent concerns, it pays to remember that trends last longer than people expect.

However, a company’s story and numbers are equally important to its chart, which is what inspired our use of the term “SNaC,” a clever acronym for “Story, Numbers and Chart.” All three matter. Stocks that have one but not the other two tend not to do well. Stocks that have two of three can sometimes get by for a while, particularly if one of the two is the chart. But it may not last long.

Apple (AAPL), for example, has the story and, for now at least, the numbers, but not the chart. Apple is a beloved name, and odds are that you’re reading this on an iPhone, but there are growing concerns that they’re falling short on innovation and that’s reflected in recent performance.

Similarly, Ford (F) and Disney (DIS) are iconic American brands that many investors see as resting on their laurels and failing to keep up with the times. In Ford’s case, it’s a failure to capitalize on EV and hybrid growth, while with Disney, they’re increasingly looking like also-rans in the streaming wars.

If you’re looking for a stock that’s both popular and a great investment, Microsoft (MSFT) may be the best example on Robinhood’s list of most popular stocks. It has the story (big investor in OpenAI and a huge beneficiary of the recent AI push), numbers (20% sales growth for the last five years) and chart (+44% in the last year) to sustain it as one of the market’s great growth stocks.

Moral of the story: while popular stocks can be great stocks, it requires a lot more than popularity to have staying power on Wall Street. Sometimes, stocks become so popular that there are scarcely any buyers left. At the next sign of trouble—an earnings miss, another ho-hum product release, etc.—many of those owners could quickly become sellers.

Stocks can be fickle that way. A lot like popularity.


Brad Simmerman is the Editor of Cabot Wealth Daily, the award-winning free daily advisory.