From the archives.
If you are the least bit familiar with my work, you know I hate these phrases. “The trend is your friend”, is probably one of the most commonly used of all of these phrases. It seems very logical, a good story and easy sell. Plus it rhymes so it must work, right? I don’t want to put words into anyone’s mouth but I believe they are saying if you just do what everyone else is doing you will make money. The same logic is why 90% of people think they have above average intelligence. Someone is the idiot in the trend, if you do not know who it is, it is you.
The more appropriate phrase should be: “The trend was your friend, back in the day.”
The “trend” is most profitable and riskiest for the ones that start it. In return, the market offers the trend starters, in an almost sacrificial way, the suckers (the last people in). This enables the trend starters to get out comfortably and/or gives them some cushion to let the trade develop more. Once you or your friend or TV or a newspaper recognize it is a trend, the risk/reward profile changes dramatically. This recognition changes the profile from being high risk and high reward and develops into high risk and low reward (trend ends) or low risk and high reward “(trend recharged).
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