Trends

In the fashion world, there are always new trends to note and follow. New trends typically emerge from New York, Paris, or Milan, and make their way to the west coast and creep slowly to middle America. People like to follow trends because they want to be in style and ahead of the curve. In investing there are trends also. Technical analysts note the 50 day and 200 day moving averages of the stock market indexes to see what direction the overall market is going. Trends can also be seen in the stock price performance of individual companies. The difficulty for most investors is what to do with the data. Will the trends support a buying decision? Do the trends say sell? Some investors hope that their favorite stocks will rebound from lows and move on to new highs. Recent buyers of GE have seen their stock price double in the past six months, although it is still down over 50% in the past year. Some stocks never recover. Kodak was one of the Nifty Fifty stocks in the 70's, but it couldn't keep up with the technology trends and lost favor with shareholders forever. Now people are asking about GM. Can they come back? Will they be able to climb out of bankruptcy and become an industry leader again? Sadly, their stock is now trading below 50 cents per share. Technology trends will always change and technology stocks are making a climb back this year. The Nasdaq index is the best performing index so far this year and is inching closer to 2000 every day. Of course, it is still well below the all time highs set in the year 2000. While the Dow and S&P 500 indexes recovered and set new highs, the Nasdaq did not. Will this trend continue? You make the call. One thing is certain. Technology will always change as new ideas are born and inventions discovered. Look for the trend and if you spot one you might be able to make some money too!