"Trend is Your Friend" Analogy
I accidentally deleted my first draft of this so this is the condensed blunt version.
*Leaving Tradelandia*
Imagine your friend Bob is throwing a big party this weekend and it sounds like it's going to be good one.
The trend is movement. The trend is whether or not people are going to the party... not necessarily the quality of the party itself.
One more time; THE TREND IS WHERE PEOPLE ARE GOING... not which is "better".
Numerous factors contribute to the "trend" for his party. It's possible there's going to be amazing food, lots of entertainment.... and still not having anyone attend.
Maybe it's because the party is on a weeknight, there's traffic, or another friend Sarah is also throwing a party at the time.
The trend is where people are going.
For beginner investors
Pretend you didn't know Bob's party is an outdoor party and it's raining.
"The trend is your friend" can shield you from making the mistake of not knowing or factoring these conditions into your decision because others that do know this information, will be using it in their decisions and going to Sarah's party.
The fact that the trend is to go to Sarah's means, you don't have to make the mistake of thinking "I bet everyone will be going to Bob's because he's serving Pizza"... and then be wrong since everyone else knew about the rain.
For intermediate investors
Imagine you are running late and you call a friend to decide which party to go to. The friend says, "Bob's party is better and there are more people here!". THIS IS NOT THE TREND. The trend is not a static snapshot.
It's possible a big group of people agreed to go to Bob's party first, then head to Sarah's. As you head to Bob's, this group heads to Sarah's. You get to an empty party at Bob's with the food gone and missed the fun.
You should have been asking your friend, "by the time I get to the party, will more people be arriving? are people leaving by now? Even if the party is fun, will it be as fun once I am there?"
Even if you're friend didn't give you much insight and just said, "Most people are leaving the party in the next 10 minutes"... it likely is enough information to not need to know why they are leaving. That's the trend.
For advanced investors
Do you get caught up in party details and speculating event turn out? Are you wasting time crunching numbers, asking what food will be at the party, and other information... only to find out you're calculations didn't result in figuring out where everyone else is going? Some last minute party came up and everyone went there? Are you at Bob's party annoyed that Sarah's party isn't as fun and everyone would like Bob's more?
Maybe it's time you step back from over antipicating, wait to see where most people are going, and go with them. After all, that's the objective anyways right? Getting to the party fashionably late is better than never and you took less risk waiting.
Feel free to add any other cheesy examples in the comments and blow this up.
*Leaving Tradelandia*
Imagine your friend Bob is throwing a big party this weekend and it sounds like it's going to be good one.
The trend is movement. The trend is whether or not people are going to the party... not necessarily the quality of the party itself.
One more time; THE TREND IS WHERE PEOPLE ARE GOING... not which is "better".
Numerous factors contribute to the "trend" for his party. It's possible there's going to be amazing food, lots of entertainment.... and still not having anyone attend.
Maybe it's because the party is on a weeknight, there's traffic, or another friend Sarah is also throwing a party at the time.
The trend is where people are going.
For beginner investors
Pretend you didn't know Bob's party is an outdoor party and it's raining.
"The trend is your friend" can shield you from making the mistake of not knowing or factoring these conditions into your decision because others that do know this information, will be using it in their decisions and going to Sarah's party.
The fact that the trend is to go to Sarah's means, you don't have to make the mistake of thinking "I bet everyone will be going to Bob's because he's serving Pizza"... and then be wrong since everyone else knew about the rain.
For intermediate investors
Imagine you are running late and you call a friend to decide which party to go to. The friend says, "Bob's party is better and there are more people here!". THIS IS NOT THE TREND. The trend is not a static snapshot.
It's possible a big group of people agreed to go to Bob's party first, then head to Sarah's. As you head to Bob's, this group heads to Sarah's. You get to an empty party at Bob's with the food gone and missed the fun.
You should have been asking your friend, "by the time I get to the party, will more people be arriving? are people leaving by now? Even if the party is fun, will it be as fun once I am there?"
Even if you're friend didn't give you much insight and just said, "Most people are leaving the party in the next 10 minutes"... it likely is enough information to not need to know why they are leaving. That's the trend.
For advanced investors
Do you get caught up in party details and speculating event turn out? Are you wasting time crunching numbers, asking what food will be at the party, and other information... only to find out you're calculations didn't result in figuring out where everyone else is going? Some last minute party came up and everyone went there? Are you at Bob's party annoyed that Sarah's party isn't as fun and everyone would like Bob's more?
Maybe it's time you step back from over antipicating, wait to see where most people are going, and go with them. After all, that's the objective anyways right? Getting to the party fashionably late is better than never and you took less risk waiting.
Feel free to add any other cheesy examples in the comments and blow this up.
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