Chapter 8: Current Hot Topics in Trading

Just like studying the business cycle taught us about the ups and downs of the economy, looking at the many popular investment strategies and hot trends shows us that they often move in and out of favor. With so much information, which is oftentimes contradictory, it is easy for the new investor to become overwhelmed and confused.
Depending on your age, you might recall some or all of these recent investing trends, like the:
  • Japanese stock market bubble of the 1980s
  • “Dot.com” Internet stock bubble of the late 1990s.
  • U.S. residential real estate bubble of 2002-2007.
  • Oil spike in summer 2008 when prices shot up to $140/barrel.
  • Many other hot topics of today like:
    • Gold, Silver and Platinum
    • Solar, Wind, Biofuel and other renewable energies
    • Bulletproof vests, metal detectors, and many more…
As you’ll learn, investment manias like these are not unusual in the history of investing. So, it is wise to be able to spot a short-term investing trend when you’re in the middle of it. Like everything else in your professional and personal life, it’s how and when you notice events, determine whether these events constitute a fad or a trend, and then act on this knowledge that will make all the difference.
This Chapter highlights the current hot trends and shows you how to profit from (or avoid) these trends. Some of these trends and techniques may eventually become fads, while others, like “buy-and-hold” strategies reach the status of proven, productive methods over time.