Active investing leads investors to choose their favorite stocks. As long as your approach is based on identifying companies with growing revenue and rising returns, these sentiments can serve you well.
Unfortunately, investors can also pick their favorite stocks purely on emotional grounds. This can cause significant pain if they become attached to stocks with deteriorating financials or narrowing economic moats.
Thus investors probably serve themselves better by choosing favorites based on meaningful competitive advantages and improving financials. Such characteristics have helped make MercadoLibre (NASDAQ: MELI) and Shopify (NYSE: SHOP) my favorite stocks.
Source Fool.com