After identifying the general market trend, you want to look for the leading sectors.
Why this matters is easy to understand.
Investing is a game of odds. You want as many things working for you as possible.
Ask yourself this. Would you buy shares of a newspaper company today? Probably not. Very few people read physical newspapers anymore. Everything is online.
Instead of a growing market, you have a shrinking one. Naturally, demand goes down. It becomes harder to find and keep customers. Keeping good employees gets harder too. Employees are less likely to join an old, stagnant industry.
Those are natural headwinds.
Now look at the opposite.
AI is one of the strongest sectors right now.
Everyone wants to work in AI. It has a natural pull. Talent, capital, and attention all flow in the same direction. It becomes much easier to grow. A leading industry is like a rising tide that lifts all boats. Not everyone benefits equally, but the overall direction matters.
Ideally, you want the entire industry to do well. If all companies are down except for one, it’s often a sign that the industry has peaked or is about to decline.
Of course, no trend lasts forever.
Some industry trends last decades, some only days. We’ve seen this again and again. The key is to be positioned in the mega trend.
Mega trends are long-term shifts that reshape industries. Think railroads, the internet, mobile, and now AI.
Boom and bust trends are short-lived spikes followed by sharp declines. Examples include SPACs and meme stocks.
Cyclical trends move in waves tied to the economy. Oil and gas are a good example, rising and falling with demand and economic growth.
Bonus Tip: You can check the leading sectors here.
After identifying the general market trend, you want to look for the leading sectors.
Why this matters is easy to understand.
Investing is a game of odds. You want as many things working for you as possible.
Ask yourself this. Would you buy shares of a newspaper company today? Probably not. Very few people read physical newspapers anymore. Everything is online.
Instead of a growing market, you have a shrinking one. Naturally, demand goes down. It becomes harder to find and keep customers. Keeping good employees gets harder too. Employees are less likely to join an old, stagnant industry.
Those are natural headwinds.
Now look at the opposite.
AI is one of the strongest sectors right now.
Everyone wants to work in AI. It has a natural pull. Talent, capital, and attention all flow in the same direction. It becomes much easier to grow. A leading industry is like a rising tide that lifts all boats. Not everyone benefits equally, but the overall direction matters.
Ideally, you want the entire industry to do well. If all companies are down except for one, it’s often a sign that the industry has peaked or is about to decline.
Of course, no trend lasts forever.
Some industry trends last decades, some only days. We’ve seen this again and again. The key is to be positioned in the mega trend.
Mega trends are long-term shifts that reshape industries. Think railroads, the internet, mobile, and now AI.
Boom and bust trends are short-lived spikes followed by sharp declines. Examples include SPACs and meme stocks.
Cyclical trends move in waves tied to the economy. Oil and gas are a good example, rising and falling with demand and economic growth.
Bonus Tip: You can check the leading sectors here.
After identifying the general market trend, you want to look for the leading sectors.
Why this matters is easy to understand.
Investing is a game of odds. You want as many things working for you as possible.
Ask yourself this. Would you buy shares of a newspaper company today? Probably not. Very few people read physical newspapers anymore. Everything is online.
Instead of a growing market, you have a shrinking one. Naturally, demand goes down. It becomes harder to find and keep customers. Keeping good employees gets harder too. Employees are less likely to join an old, stagnant industry.
Those are natural headwinds.
Now look at the opposite.
AI is one of the strongest sectors right now.
Everyone wants to work in AI. It has a natural pull. Talent, capital, and attention all flow in the same direction. It becomes much easier to grow. A leading industry is like a rising tide that lifts all boats. Not everyone benefits equally, but the overall direction matters.
Ideally, you want the entire industry to do well. If all companies are down except for one, it’s often a sign that the industry has peaked or is about to decline.
Of course, no trend lasts forever.
Some industry trends last decades, some only days. We’ve seen this again and again. The key is to be positioned in the mega trend.
Mega trends are long-term shifts that reshape industries. Think railroads, the internet, mobile, and now AI.
Boom and bust trends are short-lived spikes followed by sharp declines. Examples include SPACs and meme stocks.
Cyclical trends move in waves tied to the economy. Oil and gas are a good example, rising and falling with demand and economic growth.
Bonus Tip: You can check the leading sectors here.
