After identifying the general market trend, you want to look for the leading sectors.
Why?
Again, it all comes down to trying to maximize the odds. Ask yourself: would you buy shares of a newspaper company in this day and age? Most likely not. Few people read news physically. Most happen online.
Instead of a growing market, you have a shrinking one. Naturally, the demand goes down. It’s harder to find and keep customers. Employees are less likely to join an old, boring industry.
So, you have natural headwinds to work against.
The polar opposite would be social media companies. These were big winners of the last decade. Meta’s Facebook and Instagram come to mind. They are the clear winners here. They spread like wildfire.
But there were a few promising ones back then as well, like Snapchat or Pinterest. Both lost their way over time.
No trend lasts forever.
Some industry trends last longer, some shorter. We’ve seen it time and time again.
Mega trends are long-term shifts that reshape industries, like railroads, the internet, mobile, and now AI.
Boom and bust trends are short-lived spikes followed by sharp declines, seen in things like SPACs and meme stocks.
Cyclical trends move in waves tied to the economy, such as oil and gas, which rise and fall with changes in demand and growth.
As we’ve seen above, the steeper the trend, the shorter it lasts.
What happens sometimes is that there are fads along the way.
And you want the entire industry to do well. If all companies are down except for one, it’s often a sign the industry is past its peak or about to turn down.
You know a leading industry is like a rising tide that lifts all boats. Yes, not everyone benefits equally.
Bonus Tip: You can check the leading sectors here.
After identifying the general market trend, you want to look for the leading sectors.
Why?
Again, it all comes down to trying to maximize the odds. Ask yourself: would you buy shares of a newspaper company in this day and age? Most likely not. Few people read news physically. Most happen online.
Instead of a growing market, you have a shrinking one. Naturally, the demand goes down. It’s harder to find and keep customers. Employees are less likely to join an old, boring industry.
So, you have natural headwinds to work against.
The polar opposite would be social media companies. These were big winners of the last decade. Meta’s Facebook and Instagram come to mind. They are the clear winners here. They spread like wildfire.
But there were a few promising ones back then as well, like Snapchat or Pinterest. Both lost their way over time.
No trend lasts forever.
Some industry trends last longer, some shorter. We’ve seen it time and time again.
Mega trends are long-term shifts that reshape industries, like railroads, the internet, mobile, and now AI.
Boom and bust trends are short-lived spikes followed by sharp declines, seen in things like SPACs and meme stocks.
Cyclical trends move in waves tied to the economy, such as oil and gas, which rise and fall with changes in demand and growth.
As we’ve seen above, the steeper the trend, the shorter it lasts.
What happens sometimes is that there are fads along the way.
And you want the entire industry to do well. If all companies are down except for one, it’s often a sign the industry is past its peak or about to turn down.
You know a leading industry is like a rising tide that lifts all boats. Yes, not everyone benefits equally.
Bonus Tip: You can check the leading sectors here.
After identifying the general market trend, you want to look for the leading sectors.
Why?
Again, it all comes down to trying to maximize the odds. Ask yourself: would you buy shares of a newspaper company in this day and age? Most likely not. Few people read news physically. Most happen online.
Instead of a growing market, you have a shrinking one. Naturally, the demand goes down. It’s harder to find and keep customers. Employees are less likely to join an old, boring industry.
So, you have natural headwinds to work against.
The polar opposite would be social media companies. These were big winners of the last decade. Meta’s Facebook and Instagram come to mind. They are the clear winners here. They spread like wildfire.
But there were a few promising ones back then as well, like Snapchat or Pinterest. Both lost their way over time.
No trend lasts forever.
Some industry trends last longer, some shorter. We’ve seen it time and time again.
Mega trends are long-term shifts that reshape industries, like railroads, the internet, mobile, and now AI.
Boom and bust trends are short-lived spikes followed by sharp declines, seen in things like SPACs and meme stocks.
Cyclical trends move in waves tied to the economy, such as oil and gas, which rise and fall with changes in demand and growth.
As we’ve seen above, the steeper the trend, the shorter it lasts.
What happens sometimes is that there are fads along the way.
And you want the entire industry to do well. If all companies are down except for one, it’s often a sign the industry is past its peak or about to turn down.
You know a leading industry is like a rising tide that lifts all boats. Yes, not everyone benefits equally.
Bonus Tip: You can check the leading sectors here.
