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5 Brilliant Tips on How to Identify Market Trends to Make Smarter Investments

5 Brilliant Tips on How to Identify Market Trends to Make Smarter Investments


( 25, 2019)--You may have heard rumors that no one is investing in stock anymore, but that just isn't true. In fact, global market capitalization has gone over 80 trillion dollars in 2019, which is a 320% increase from ten years ago. 

If you want to make a little extra money and you have a bit to spare, you might make the smart decision to invest in stocks. Once you've resolved to do this, the question then becomes where, exactly, you want to invest. 

Making an investment requires you to look into today's market trends and analyze which industries are booming. This means that you need to determine where the money is going before everyone else decides to invest... and take money that could be yours.

Read on to learn how to identify the most booming businesses for you to invest in... and figure out how to buy stocks the wise way!

1. Use Common Sense

As with everything, the first thing you can do when looking to invest is to use common sense. Unless you're living under a rock, you can get a pretty good idea where people are investing their money. All you need to do is peruse the aisles at a store and see which brand names you see over and over again to get an initial feel.

More than that, though, you can just think about what people are doing in their day-to-day lives. People play a lot of video games today, for example, so investing in Nintendo might be a good choice. On the flip side, perhaps a paper company isn't a good investment, no matter how much you love The Office. Most things are paperless nowadays.

2. Do a Cursory Keyword Search

After thinking things through, it's time to go ahead and perform a keyword search. By this, we don't mean typing simple searches into Google, though there isn't anything wrong with this for preliminary research. By 'keyword search,' we mean specific software that analyzes data that search engines collect.

One amazing software out there is Google Trends. Basically, if you install the application, you'll be able to see and analyze the terms that are searched for the most in Google. In the end, this will let you index investor sentiment and figure out what the next big thing is on the market.

3. Analyze Economic Reports and Market Trends

You'll also want to analyze data like these economic reports. The federal government, along with large corporate entities, organizations, and state schools publish economic reports at least once a year that show how money is being allocated. Retail sales are included in the reports, which lets you see what brands people are buying!

Looking at these economic reports are a great way to learn where people are putting their money. Since they come out pretty regularly, it's also a great tool to see how the tides are shifting over time.

4. Look Into Secular Trends Most

There are different types of market trends. To tell someone to 'look into market trends' is a really broad instruction that leaves a lot of room for interpretation. The goal of this section is to highlight some different types of trends within market analysis and determine which will help you most (as you might have guessed, it's secular trends.)

Types of trends are usually classified by how long they stay in style. Primary trends are the most common, and these tend to last between one and three years. Intermediate trends are a part of this, which basically describe a sudden spike in sales or investment in the middle of the primary trend for a short but sweet duration. Cyclical or seasonal trends show a spike in sales during a few-month long period.

Secular trends are the most long-term kind of trend. Lasting from one to three decades, these show something steadily becoming more and more popular over the course of time, creating a market of their own. A current example is online sales!

Because of their longevity, secular trends have a pretty easy-to-determine path. They're going to continue to go up and up until a distant future time in which they're not popular anymore. Because the past repeats itself in economics, you can predict when this will be based off of past secular trends.

5. Hire a Professional

Even if you think you have it all figured out, it's best to consult with a professional investor just to be on the safe side. These experts have worked with economic analysis for years and likely have studied it extensively for years before that. Although you might have looked into market trends and learned what to do, these pros will know many models for investment that you've probably never heard of.

Sitting down and talking out your financial plan with someone is a good idea, but it's also important to go in with a financial plan in the first place. Don't only rely on the professionals- there's no one better to decide what to do with your hard-earned cash than you.

Go Make Bank!

Investing in stocks can be an anxiety-driven experience, but you can rest assured that you'll have a good chance at making money if you're smart. Look into secular trends, watch the stock market over time, and use common sense. The world will be at your disposal!

Now that you know how to make money by identifying market trends, head over to the CNB News Facebook page by clicking the tab at the top of our main web site. We'll post all sorts of tips to help you in both your personal and professional life!

Good luck! Go get 'em!