Think of Green Mountain Coffee Roasters Inc. (Nasdaq: GMCR), Groupon Inc. (Nasdaq: GRPN) and Zynga Inc. (Nasdaq: ZNGA).
Retail investors flocked to all these stocks, only to get burned: All three collapsed.
Now, with the S&P 500 and the Dow Jones Industrial Average up over 7% the past month to near all-time highs, other stocks have attracted quite a bit of buzz among retail investors.
But investors eager to jump in to the markets during the strong start to this year need to be careful: Many stocks that seem attractive to retail investors are actually seductive traps.
The five stocks below have made amazing gains in relatively short time spans, leaving investors who missed out wanting to cash in on the companies' success. Plus, investors often like to shop at these companies or use their products, making the stocks appear even more appealing.
But you'd do well to stay away from these overvalued stocks with poor long-term prospects.
Source: http://moneymorning.com/2013/01/29/the-5-most-overrated-stocks-that-retail-investors-love/
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