When you see that a lot of analysts feel the same way about a stock, you may be tempted to follow their advice. But that may not work out so well for you.
A recent study by
Bespoke Investment Group shows that the 50 stocks in the S&P 500 that garnered the most positive analyst ratings dropped an average of 2.4 percent during the past two months.
Meanwhile, the 50 stocks that have the most negative ratings advanced an average of 3.5 percent.
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"That's a pretty huge difference, and it certainly helps in part to explain why so many investors are underperforming," Bespoke states. "Owning the most-loved stocks has been a losing trade in the current market environment."
Among the most-loved stocks that have fallen are Facebook, Priceline.com and CBS,
CNNMoney reports. The scorned stocks that have risen include oil and gas driller Diamond Offshore, Deere and Campbell Soup.
Some of the discrepancy between the recommendations and stock performance stems from the market's recent rotation to value stocks from growth stocks, according to CNNMoney.
Investors have found the situation difficult. "When you are fighting a market trend, you have to choose whether you have to ride it, or you get out of the way," Jerry Braakman, chief investment officer of First American Trust, told
Bloomberg.
First American has reduced its stakes in financial and consumer-discretionary companies and added shares in energy and utilities.
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