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And once hordes of people like a company, it becomes what finance professor David Hirshleifer calls a “celebrity stock.” At that point, just like Kathie Lee Gifford or Mr. T, it is almost sure to end up overpriced, overexposed, and overdue for a collapse in popularity. No matter how great a business may be, its stock can’t be an enduring moneymaker once an investor stampede drives the price up too high. Thus, over the long run, familiarity breeds failure.
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