The Power of Trends and Spreading Ideas

Investing is the expression of views on the future, and trends are the spread of ideas. Fundamental analysis, which aims to determine intrinsic value, is flawed as there is no objective way to define or determine true value. Technical analysis is also limited as it relies on historical patterns without statistical proof. Instead, one can anticipate the anticipation of others by identifying and following groups with strongly expressed views. Trends start with the emergence of a new idea, which spreads from innovators to early adopters, the early majority, the late majority, and finally the laggards. Recognizing the three ways a trend can start, such as a drop in a previously rising stock, can provide insight into market movements.