Popularity Contest

Image source: Kathy Hutchins - Shutterstock

What's going on?

Tesla would like to thank its mom, its dad, and its BFFs, because fresh analysis this week showed the electric carmaker is the most popular company with European investors.

What does this mean?

Invezz.com looked at 31 European countries’ Google habits to work out which stocks investors are searching for most – and, by extension, which they’re most interested in investing in. And it was Tesla that took the top spot, winning the day in 26 of the 31 countries and featuring in every top ten but one – a feat only Apple and Amazon could match.

European companies, meanwhile, were nowhere to be seen in the overall top ten, even though it included Chinese companies like ecommerce giant Alibaba and electric vehicle maker NIO. That might be because investors seemed particularly interested in fast-growing tech companies, which humdrum European stock markets are notoriously short on.

Why should I care?

Zooming in: Say nomo to FOMO. 
It’s easy to see why investors would want in on the Tesla action: the carmaker’s share price is six times higher than it was the start of 2020, not to mention the growing trend toward more climate-friendly companies. But there’s also a real risk of so-called “performance-chasing”, which can lead FOMO-fueled investors to buy stocks at their highest levels. They’d probably be better off just following Warren Buffett’s advice: “Be fearful when others are greedy, and greedy when others are fearful”.

For you personally: Broader is better. 
You can pick individual stocks like Tesla to invest in, but even professional investment managers struggle to choose stocks that consistently outperform the overall stock market. So it’s perhaps no surprise that the simple and low-cost solution of exchange-traded funds – which can track indexes as a whole – have become such a hit with investors. By buying a slice of the Teslas, Apples, and Amazons all in one, you reap the rewards of their successes without getting dragged down too much when they make a mess of things.

Originally posted as part of the Finimize daily email.

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