I see Thomas Cook (LON:TCG) is down 4.8% today. Ouch. TT. (TUI Travel) reported its Q3 results today, in which it reported strong demand across key markets, operating profit up 18%, and was well positioned to deliver on its five year growth roadmap. That sent the shares down 4.9%. It looks like the momentum has had the wind knocked out of its sails for now, and TCG is catching the vibes.

Back to my tip … if you take a look at UK StockChallenge: http://www.stockchallenge.co.uk/ and check out the Stock Entry Details tab for the month, you’ll see that TCG is, overwhelmingly, the most-selected share for August.

Although, admittedly, the number of observations I have made are very small, I have noticed that the topmost selection underperforms. Last month, THT (Thorntons) was a disappointment. THT was down 11.9% – compared to the All-Share, which was up 7.1%. I had also noted some other popular share from a previous month perform badly - but I don’t recall what it was.

So that’s my tip. The most popular share for the month should probably be avoided. That slam-dunk share that everyone thinks must be a winner is likely to be an overcrowded trade. If I owned it, I might think about selling it until the heat died down. TCG has a price to 50dMA of 19.9% – which is around the upper end of what I’d consider my “hold” zone. I’d consider it a sell at around 25%, and I’d want to see a big scaling back before getting in. My method isn’t foolproof by any stretch of the imagination; my sale in SGP (Supergroup) was far too premature, for example.

I’m not saying that you should be a contrarian just because a selection is popular, what I am saying is to avoid the MOST popular share, as everyone who wants to be on board is likely to have bought in.

Happy investing to you all.

Unlock the rest of this Article in 15 seconds

or Unlock with your email

Already have an account?
Login here