[TOPIC] Will you make money by chasing hot trends?
Many believes that the essence of investing is to follow the trend.
1. Chase the hot trend and make a fortune
The market is constantly changing, and hot trends emerge one after another. From "semiconductors" to "new energy vehicles," to "metaverse," and "AI" concepts, stocks of companies in hot sectors have skyrocketed.
Therefore, some people believe that good investors should be able to catch the trend.
For example, during the short squeeze in early 2021, the stock price of GameStop ($GME) surged 2700% in less than three weeks from January 8th to January 27th. Keith Patrick Gill, a 34-year-old financial analyst from Boston who led the short squeeze, gained returns in January exceeded 4000%, making over 200 million in profits.
In the end, this epic battle involving 900,000 retail investors created countless myths of doubled returns, including $AMC Entertainment(AMC)$
If investors can buy into hot industries and popular stocks during their upswing, they can make a lot of money.
However, some people believe that chasing hot trends may offer opportunities for significant gains, but it also exposes investors to market risks, including the possibility of a sharp downturn. Therefore, investing should also be guided by sticking to one's investment principles.
2. Follow your principles and make a solid investment
On Research Institute once selected the top 100 companies with the highest turnover rate each week and adjusted the sample stocks weekly. The index started at 1000 points in 2000 and dropped to 10.11 points in 2017, a decline of 99%. This is often cited as a typical case of failure in chasing hot stocks and being forced to buy at high prices.
As economist Paul Samuelson said, "Investing should be boring, not exciting. Investing should be more like watching paint dry or watching grass grow.”
Another example of solid investment is $Apple(AAPL)$.
Have you ever successfully captured a market hotspot and made a fortune?
Do you prefer to chase hot trend or stick to your principles and make a solid investment?
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Although i like to stick to ‘my own conviction’, it does not mean i do not care about the trend. I do chart analysis on the idenified targets and follow the trend towards getting the entry prices. So for example, an ifentified target in 52weeks high might just mean the beginning of bullish thesis or hot trend, and does not impose a deterrent for me not to enter a position. Is this then considered trend chasing or sticking to own principles? I would say both fly, as long as one does not go into a hot trend blindly, which is the essence of investment. Look the other way and we are into casino! [喷血][龇牙][流泪]
Oh Yes, I do chase the hot trend and will continue to do so. One part of me is to play safe by making solid investment with principle for income growth. But the other part of me loves excitement and thrills by chasing stocks of hot trends. These hot stocks keep me alive for knowledge acquisition as well as update of what's happening in the marketplace – new market trends, new investment opportunities, new services of potential growth etc. My past experience wasn’t that positive as most of the time I wasn’t savvy enough to catch/exit the stocks in the most appropriate time and price. The downtime can happen too soon (depending on the nature of the stocks, within days/weeks/months), caught me in surprise and in significant loss of capital gain (well, a small player, every $ and cents become significant). I do see slight improvement as recently, I did make gains a couple of times, which not enough to recover the losses that I have made in the past. However, I believe in hybrid strategy to make more gain than loss in the investment journey. So positively will keep learning to accumulated experience to do better and will never lose hope in chasing hot trend to make some good money.
Never really made anything from chasing hot trends, but with a solid investment like index funds and dollar cost averaging, my portfolio goes up. Admittedly, you won't get a huge windfall with this strategy.
Stick to my trading plan and make solid investment with guidance from my A.I. But it does not hurt to look out for sign of correction, rotation or rally.
$GameStop(GME)$