The more I look, the more I see
Trends emerge way before the masses manage to catch them. This is the reason why people are usually late for the next big thing. By the time when trend accumulates the critical mass and becomes a new norm, it is already too late to jump in. This fact is especially true when it comes to financial trends.
As an obvious example, let’s look at Bitcoin. 10+ years since its start it is now a widely used financial tool. One can argue if it is a good or bad one, but this doesn’t change the reality where the Bitcoin market cap exceeds 2 trillion US dollars. Not only did it reach the critical mass to become a part of our everyday conversations with friends and family members, but BTC also went a step forward to be included as an investment tool for banks and hedge funds, and a valid hedging option for people to balance out their savings against inflation.
In my opinion, it is not the best time to bet on Bitcoin, as there are many other financial tools to get better returns with lower volatility and risk. Nevertheless, this urge in my mind always pushes me to come back and do BTC technical analysis time and time again.
But my rant here is not financial advice with a “not a financial advise” disclaimer. I am more interested in exploring the emergence of trends that change the world, and why most people are trying to jump into the trend ship when the ship sailed a long time ago. Perhaps along the way, we can discover a methodology that will allow us to spot future trends faster and right on time.
What is a trend?
Dictionary gives us a very simple definition of it. It says “A trend is a general direction in which something is developing or changing”. Although it is an okay explanation, it is too general too. We can project this understanding into everything within and without ourselves and call trends. You gaining proficiency in your career is a trend. An upwards trend of your proficiency. Or if you are starting to drink a bit more week by week, or even worse, day by day, this is also a trend. A trend of developing alcoholism. Like these examples, a lot of things fall under the trend umbrella. However, market trends, especially the ones that make you mentally suffer because of lost opportunity after you spot them is a very interesting case we need to focus on specifically. For sake of distinction, let’s call them “opportunity trends”.
Opportunity trends
Bitcoin was a huge opportunity millions of people fucked up with. If you invested $1000 in Bitcoin on the 17th of July, 2010, a bit more than a decade later, at the beginning of 2022 you would have made a 68,452,129.949% return and turned that $1000 into $684,522,299.49. Let that sink in. Okay then, why haven’t you invested? Let me just provide my excuse, and try to not get deep into depression while I’m doing it.
I heard about Bitcoin quite early, in 2010. It did not even spark a tiny interest in me. My reaction was “meh”. I kept hearing about it from my friends. Some of them were quite fanatic and trying to sell me the value proposition of this new online money. I wasn’t resistant to Bitcoin per se, I just did not care. Over the next decade, Bitcoin kept entering into my info bubble, and it hit hard in 2017 when BTC price skyrocketed to almost $19K. From that time on I put my money into Bitcoin occasionally, never being able to maintain it as a good portfolio item.
Another example of the opportunity trend I (think) am missing is NFTs. My artist friend was pitching NFTs to me in early 2021, sending links from Foundation to prove that it is the next big thing. I researched it in a very shallow way and decided that it is probably another tool of crypto whales to launder money or do some shady stuff. But this year, it is obvious to me that NFTs are much more than money laundry tools. For sure, someone is laundering money, no doubt about that, but digital art on the blockchain market is growing to become a huge industry on its own.
There are a lot of other trends that I just passed by. But then, I decided to stop and understand my behavior — why do I appreciate such opportunities only when they grow from a new trend into huge industries? I finally found an answer to it.
To see more, you need to look more
The main reason I was missing such big opportunities was simple — I was not paying attention to them. Hearing about something and reacting as “meh” is the biggest cure we need to overcome. If we consider each new thing as a potential opportunity that will help us get rich, it only makes sense to pay attention to them. But technically speaking, what does this “paying attention” means? How to do it to not miss the ship?
Let’s take a look at a very simple correlation between your perception of trend, and ints formation, and your interest in it.
First, you get the initial information about it. Just like hearing something about Bitcoin in 2009 or 2010, or about NFTs in 2021, etc. If you are like most people, you just react like “hmm, interesting”, but when your friend changes the topic, you just forget about it. As a next step, you keep hearing/ reading about that new trend more and more. Usually, this phase is characterized by the growing frequency of incoming information. If the trend is really strong, then your exposure growth to it is quite exponential. This is the phase when you start paying a little bit of attention, and maybe heading to Twitter to see who is talking about it, or skimming through some blog articles. Before you manage to familiarize yourself with it, the next phase — the first big spike happens. You hear about a teenager who made millions on it or how a couple of dollars of investment a month back turned almost-homeless-guy into a rich dude. Some people get this first kick of “damn, I should have joined before” at this phase. But most simply stop by just reading about those success stories, but don’t act. As this new trend is becoming more and more mainstream now, your interest in it starts to decline, or rather say, among your day-to-day care, this trend doesn’t play an important role, if any at all. Your interest reduces and you start to forget about it quite soon.
Quite soon the same trend spikes suddenly and where you find yourself quite surprised, annoyed, depressed. In short, you experience a lot of feelings at once, but none of those feelings are related to joy and a sense of accomplishment. You know you missed the train — you missed your opportunity to surf that wave and make fortune while doing it.
Now let’s talk about how to avoid all that unpleasant feelings, and once for all, notice trends soon enough to get on board.
Everything starts with your attention
You need to pay attention. To pay attention, you need to deem that new information that enters into your info-bubble to be worth it. You also need to be willing to invest a bit of time to research that new thing, understand what it means, how it emerged, and how important it is, if important at all.
Holding on to new information
You hear about this new thing, next time it happens, just entertain it a bit. If your friends are telling the story about it, ask them to explain. Why they are excited about this new thing? Why do they even consider talking about it when they could talk about anything else, perhaps a bit more entertaining topics? Like that chick, they met last week? How come this new thing is gaining priority in their attention, so much so that they are now evangelizing it here? Don’t worry if you find their excitement quite shallow. That is also fine if they can’t answer all of your questions. Just pull the general idea from them, as much as you can.
Going into the supply and demand side of it
If a thing is valuable, it means it is solving an important problem. Some people decided that there is a demand in the market for that solution, and invested their time and money to supply that demand. Go, do your homework now. Understand this simple economy 101 sides of a new trend. What problem is this new thing is solving? Is that problem deep enough to have a solution? Also remember not all problems deserve a billion-dollar solution, and not all the solutions justify the buzz. Here just make your judgment.
Spotting real-life applications
Alright, you cracked the economy side of it. Now it is time to see if the real-world application of this solution is working actually. Or promises to work soon. If so, then here you go, you can start surfing the wave.
Surfing the trend
This one is an open format. Some of the trends simply require you to put your money into them, like cryptocurrencies. Some of them demand your creativity, such as NFT pieces. Others expect you to build up a platform for them(e.g. OpenSea for NFTs, Binance for crypto trading, or new technology based on blockchain, etc). No one formula fits all. The same opportunity trend might be exploited from multiple angles, so here you decide based on your talents.
Conclusion
Although I tried to provide a reason why we are late to trends and put together a framework to spot them right on time, you won’t be able to apply it with all of the trends. Some of them just don’t make sense. They grow as bubbles, create fake importance, and then burst. Like that YO app. Such stupidity, right? Now we can see it, but when it started to emerge and attract millions of VC money it sounded like a good, dead-simple opportunity no one knew has existed. But they failed. Most trends do. That is why it is important to channel your focus to ones that have a solid foundation, solve an important problem that the world faces.
