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16 February
Buying stocks everyone admires is a recipe for underperformance — but Apple breaks the rule
Apple Store with a large Apple logo on a glass building on 5th Avenue in New York City.
Apple has been an exception to the stock market’s ”most-admired” trap. Photo: Getty Images

Popularity on Wall Street is a double-edged sword. Remember that as you peruse Fortune’s recently published ranking of the “World’s Most Admired Companies” — the magazine’s annual ranking of corporate reputation. Being at the top of such a ranking can push a company’s stock to quick highs at the cost of long-term performance.

Fortune’s ranking reminds me of those contests in high school where the most popular students ultimately lead sad lives. This impression is more than anecdotal, according to Ralph Keyes’ famous 1977 book, “Is There Life After High School?” He wrote that there often is an inverse relationship between high school popularity and success later in life.