As an investor, there isn’t one right way to evaluate the market or your next big investment. You might choose to rely on the fundamentals and only invest in companies that meet certain financial criteria. Or you might make investment decisions based on the behavior of other investors or trends you see in the world. You may do a combo of both.
These days, the lines between the stock market and the social trends that shape our society are increasingly blurred — just take the recent meme stocks phenomenon. This is due, in part, to social media and the ability for just about anyone, anywhere to stay tuned in to what’s going on. Similarly, investors of any level can connect online and discuss trends and share market strategies.
While we may not be able to predict the next meme-worthy investing trend, we can look at other social movements emerging both digitally and in the real world and how they could impact your portfolio.
Measuring Personal Wellness
If you wear a smartwatch, get notification reminders to practice daily meditation or track your budget through an app, count yourself a part of this trend. Mental, physical, emotional and financial wellness are major talking points across the social landscape these days — and businesses have taken notice. Now, there’s an app or device to track your well-being in most facets of your life.
For DIY investors, like those using a Self-Directed Trading Account, the wellness space could be an area you’re interested in exploring — especially if you find yourself within this trend. While investing in tech may feel overwhelming, it might help to pick a direction. For example, you may find that researching companies that manufacture technology for tracking sleep or another wellness-specific product provides more direction and personal intrigue.
Innovation in the wellness industry continues to grow, and as more and more people make these kinds of products and services a part of their daily lives, it’s unlikely this trend will slow any time soon. Still, it’s important to remember that investing in any industry presents risks of loss, and even those that may be flourishing today can’t promise future returns.
Decentralization can occur in several different forms, and we’ve seen this trend play out in recent years in the music, education, television and other industries. It’s also occurring in the financial world though the growth of cryptocurrency. The philosophy behind cryptocurrency is that money should be controlled by the people, rather than a central bank (hence, decentralization).
You probably hear news about crypto on TV or on your social feeds fairly often. It’s a hot topic — but that doesn’t mean it’s necessarily the best fit for your portfolio due to its volatility.
Think of it this way: All it takes is one or two well-placed tweets from influencers like Elon Musk or Mark Cuban to send interest — and investments — in cryptocurrency soaring … or plummeting.
If you’re considering making cryptocurrency a part of your overall portfolio, it’s important to understand how social media chatter may influence pricing and trading. The amount of attention a particular investment is getting on social media can be a powerful momentum driver for determining which way prices go and what kind of gains or losses that means for investors.
Looking for more on this topic? Learn more about how social mega trends are shaping personal finance.
Unlike ever before, anybody on the internet has the ability to become a successful content creator. Social platforms like YouTube, TikTok and Instagram have made it possible for normal people to essentially become online celebrities (a.k.a. influencers) who have the power to drive the purchasing decisions of their followers.
Brands that show they are smart with their influencer strategies, like many direct-to-consumer (DTC) companies, could be better poised to excel in the rapidly expanding world of e-commerce — a world where traditional advertising and celebrity endorsements don’t go as far as a shoutout from Addison Rae or Charli D’Amelio. But for savvy investors, it’s important to not just focus on a brand’s social media presence, but also the values and practices they hold offline. That means not just investing in trendy social media companies, but those who also have fundamentals and financials that align with your goals.
Digital Tech Reliance
We’ve all grown increasingly tied to our devices over the last decade, but the COVID-19 pandemic exacerbated our reliance on technology and digital services in everyday life. For example, 2020 saw more people relying on things like:
- Grocery delivery
- Food delivery
- Online shopping
- At-home workouts
Consumers found new ways to cope with social distancing requirements and stay-at-home orders by adopting services like DoorDash, Instacart and Peloton. That in turn created a boom for the companies that were offering these digital services. While life may be returning to a new state of normal, many of the tech-related trends born from the last year won’t go away (ask anyone who hopped on a Peloton).
As the world around us becomes increasingly digital, the opportunities for companies to innovate and create new products or services to make life easier are endless. Investors should stay attuned to apps and services focused on making at-home life more seamless and interconnected.
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Trends come and go all the time. Some are just fads — like the time everyone became a sourdough connoisseur for a few weeks — and some are ongoing and have the power to affect society in big ways. As an investor, spotting emerging movements can be one way to discover new industries or stocks for your portfolio. Just remember, sometimes you have to look beyond the newsfeed to see the bigger picture of emerging trends.
Listen to trends or follow your own investment path with Ally Invest.