Can You “Buck the Trend” When Investing?

by Investing School on February 27, 2012

It is no secret that the stock market is particularly volatile right now, and that picking the right investment is a challenge. For most investors the trick is to find a way to “buck the trend” when placing their money in a portfolio. The slang term is defined as moving in the opposite direction of the overall market or competition. For example, CDs are now being phased out of the music industry due to lack of profitability. If a company was able to find a new, successful market for CDs that would be bucking the trend.

When a stock can “buck the trend” it is often considered a sign that that company is attracting investors regardless of negativity that may be surrounding competitors. It may be that the successful company has a particularly good marketing campaign, has a better reputation, or offers a better product. Such gems can make a significant difference in your portfolio if you are fortunate enough to spot them.

A strategy which may be useful right now in bucking the downward trend of world wide markets is to invest in growing industries. Such industries include those which offer green technologies or innovations that significantly improve upon existing products. Another approach, which is harder to achieve, is to properly anticipate developments in existing industries, and purchase stock just before it becomes popular.

While it is incredibly difficult to position yourself consistently to buck the trend, it is a most desirable strategy. When companies succeed in doing so in the face of industry trends, they are worth a second look.

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