Paying attention to trends can be a very beneficial strategy to purchasing and reaping gains from individual stocks. The trends I am referring to are consumer trends by observation, not stock or technical trends. Below are a few simple tips to get your research started in potential companies that will benefit from consumer trends.
- Pay attention to where consumers are shopping. For example, go to your local mall and sit and people watch for 15 to 30 minutes. Note which stores are frequently visited and which are not. This will give you a general idea of what stores or companies are successful at attracting customers resulting in potential profit increases.
- Notice the national news trends and top stories. For example, when fuel prices hit record levels, there were thousands of news stories, articles, and specials on alternative energies such as solar and wind. If you would have invested in the top solar companies during that time, you would have doubled or tripled your money. (Notice that the focus is not on the remarkable gains here, but rather the fact that this strategy can and is profitable.)
- Read current issues of popular magazines and note the current clothing, entertainment, and lifestyle advertisements. By connecting popular products to companies, you can generally find excellent investments that are not yet fully discovered by investors.
- Cash in on housing trends. Observe your local community and state for general housing trends. If homes are selling rather quickly, and new neighborhoods are growing rapidly, find out which builders are profiting from the housing boom, and invest in those companies. Alternatively, you can invest in REIT’s (Real Estate Investment Trusts) which generally have higher dividends and tend to sky rocket as housing prices trend upward. If real estate is level or declining, it’s good to look for REIT’s that focus on apartment complexes or rentals only, as the rental market tends to be very positive when housing prices are in decline.
Following a few simple steps as noted above can help individual investors get great leads on potentially profitable stocks.