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How do product trends affect your investments?

by Financial Design Studio, Inc. / November 11, 2018

With the past six weeks of market volatility we understand it’s been discouraging to see the effect of this market pullback.  And there has been an encouraging bright spot this week! During the week we have seen the market try to make positive moves, only to move lower.  But even those brief moments higher are good! Thursday brought a positive reprieve we’ve been hoping for with the day ending higher. And this is why it’s important to turn off the TV when you are just too discouraged to remember you’re investing for the long-term.  Unless your circumstances have changed and you need to make a change in your plan, most of us need to sit tight for the longer-term.

Now, some of the market pullback we have seen in high growth names like FANG (Facebook, Amazon, Netflix, Google) has been a rotation away to other sectors like utilities or consumer staples.  These are areas that investors find safety in and they buy when they believe a recessionary environment might be ahead. This is another reason this area has been hit so hard, but is it all justified and should you really move investments out of these higher growth names?  Be careful because the market could move higher very quickly!

I heard an interesting interview this week with Steve Wozniak, the co-founder of Apple, Inc.  I think you’ll enjoy hearing his perspective on a variety of topics but mainly his perspective on Apple.  He mentions the sheer size of Apple and the huge resources of cash that they have available to them to continue innovating in their existing products but also new products.  This was a great reminder to not get caught up in the stock price of the day but really understand that companies are always working on multiple products at any given time. And just because we, as investors, don’t like what a company is doing doesn’t mean the company can’t still succeed.

At the recent Charles Schwab IMPACT conference I attended you recall there were a variety of fascinating speakers.  The author and speaker, Rohit Bhargava, spoke about his company’s project to publish a book each year of the non-obvious trends he sees.  There are non-obvious trends that he tracks each year to help people in business and government understand common patterns that you want to be aware of in order to succeed.

To wet your appetite he suggested a few things:

  • A human “relaxed” checkout line rather than a speedy checkout line.  
  • He also mentioned a habit he has of buying a magazine on a random topic he knows nothing about to read and learn something he doesn’t already know.  
  • A fascinating trend he noted was that of speed understanding rather than simply speed reading.

I find these new ideas and topics enlightening to hear.  Even in your investing choices you need to be aware of trends that are happening so you can understand shifts that take place away from certain investments toward others.  These may show up in obvious product cycles like everyone owning a certain product, but they can also show up in non-obvious ways we need to be tuned in to that businesses certainly are paying attention to.  And why not pick up a free book on us to learn about some non-obvious trends?

Wondering how this affects your investments? Schedule a call with Michelle and Steve to discuss your portfolio today.

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Financial Design Studio, Inc.

We are financial advisors in Deer Park and Barrington, IL. A team with a passion for helping others design a path to financial success — whatever success means for you. Each of our unique insights fit together to create broad expertise, complete roadmaps, and creative solutions. We have seen the power of having a financial plan, and adjusting that plan to life. The result? Freedom from worrying about the future so you can enjoy today.