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Why Buying Stocks Everyone Loves Usually Backfires — But Apple Is the Odd One Out

There’s a classic piece of Wall Street wisdom: if everyone already loves a stock, the easy gains are probably gone. Chasing the most popular names often means buying at the peak, only to watch the price slip later. Experienced investors steer clear of these “crowded trades.” But then, there’s Apple — and it keeps breaking the rules.

Let’s be honest: FOMO hits hard, especially with a stock like Apple. It’s everywhere — in your index fund, your phone, your daily headlines. As of mid-2024, it’s still the biggest company on the planet by market cap. Analysts mostly say “buy,” and Warren Buffett’s holding a ton. If you’re not in Apple, it kind of feels like you’re missing out.

And yet, Apple keeps proving the skeptics wrong. Since the iPhone launched in 2007, Apple’s stock has soared more than 4,500%. Even after becoming the poster child for “everyone owns it,” it continues to outperform. Usually, when a stock is this popular, gains slow down. The logic is simple: when almost everyone’s in, who’s left to buy more? But Apple has kept finding those buyers, year after year. It’s a real outlier.

Why Popular Stocks Usually Fall Short

When a stock becomes everyone’s favorite, two things tend to happen. First, its price already reflects all the good news — plus a big dose of optimism. Second, surprises become rare. The next iPhone? Already factored in. Services revenue growth? Already baked into the price. This means the bar for positive news is insanely high.

I’ve seen this pattern play out again and again: Tesla in early 2021, Nvidia after their first AI rally, Netflix in the mid-2010s. When a stock reaches “can’t lose” status, even a small letdown can send it tumbling — sometimes for years. And it’s tough to sell those winners when everyone’s convinced they’re the future. But the reality is clear: the more people own it, the fewer new buyers remain.

Apple’s Secret Sauce: Execution and Buybacks

So what makes Apple different? It goes beyond the iPhone or its ecosystem. Apple’s strength lies in its relentless execution. Whether it’s managing supply chains, keeping a fiercely loyal customer base, or maintaining high profit margins, Apple just keeps pushing forward. Most companies get complacent at this stage — but Apple keeps innovating and optimizing.

Then there’s the buyback game. Apple has been buying back its own shares like crazy. This isn’t just smoke and mirrors — by reducing the number of shares out there, earnings per share get a boost even if total profits stay flat. Investors love that kind of tailwind. Compared to other mega-caps, Apple’s buyback strategy is in a league of its own.

Don’t get me wrong — it’s not always a smooth ride. Apple had some rough patches, like in 2015-2016. But overall? It’s been a remarkable story defying most expectations.

Why “Everyone Owns It” Isn’t Always a Bad Sign

The usual warning about crowded trades still holds water. Look at Cisco in 2000 or Peloton in 2021 — just being popular doesn’t guarantee you’ll make money. In fact, it usually means you should be cautious.

But sometimes, fundamentals are just too strong for the usual rules to apply. The tricky part is figuring out when a stock is truly exceptional versus riding hype. With Apple, the difference is clear in the numbers and the cash flow.

That said, Apple isn’t invincible. Growth is slowing, the iPhone market is mature, and services are growing but not fast enough to completely replace hardware cycles. Plus, regulators in Europe and China are keeping a close eye. Buying Apple today means betting their “exceptionalism” continues.

When This Strategy Can Backfire

There are two big things to keep in mind. First, buying Apple (or any big-name stock) at insanely high prices is risky. No company grows faster than the entire economy forever — the price you pay matters a lot.

Second, this approach falls apart if the company slips up. Apple’s execution has been stellar, but it’s not perfect. A major product flop, a regulatory crackdown, or a supply chain mess could change everything overnight.

Remember 2018? Apple missed sales guidance and dropped 10% in one day. If you bought in chasing the hype right before, it took a year just to break even. Most investors don’t have the patience for that kind of rollercoaster.

Should You Buy What Everyone Loves?

So, is it smart to buy a stock everyone’s crazy about? The answer isn’t simple. Most of the time, it’s a no-go. The odds aren’t in your favor, especially if you jump in late. But Apple? It’s been different — at least for now.

I’ve seen way too many portfolios packed with “last year’s winner,” hoping for another Apple magic. It rarely pans out. Microsoft is maybe the only other comparable exception. Usually, betting on the crowd’s favorite leaves you exposed with little upside.

The Takeaway (and a Word of Caution)

Apple’s run is historic. It shows that sometimes, a truly great company can break the usual rules. But don’t let that trick you into thinking it’s normal. Most stocks loved by everyone end up disappointing. Apple remains the exception, not the rule.

If you’re thinking about buying Apple today, be clear on what you’re getting: a powerhouse with slowing growth but unmatched operational skill. Don’t expect the next decade to replay the last. And for almost every other stock, popularity should make you pause, not rush in.

At the end of the day, the best returns usually come from those unloved, misunderstood, or overlooked stocks — not the ones everyone’s already fallen in love with. Apple’s just one of those rare cases where the crowd got it right. For now.

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