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What are Market Trends?

Forecasting market trends helps determine what investments to buy and sell.
People with investments in the stock market try to identify trends.
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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 20 September 2014
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Market trends refer to the general movement of an investment market. People involved with stock markets attempt to identify the current type of movement that is taking place as well as project how long the current movement or trend is likely to continue. Determining what type of investments to buy and sell is greatly influenced by accurately assessing and projecting trends.

The process of identifying market trends relies greatly on the concept of efficient market hypothesis. Essentially, this concept involves understanding that financial markets supply the building blocks required to decide on how to buy and sell, since it is possible to research the factors leading to the current market condition. By taking efficient market hypothesis into consideration, it is possible to understand how the market reached the current position, which factors are likely to consider shaping the market, and what could occur to change the current trend at some point in the future.

For the most part, investors and brokers tend to group trends into three categories. Primary trends are movements that apply to the majority of the stocks traded on the market or within a specific sector of the market. Generally, a primary trend will continue for at least a year and sometimes longer.

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Secondary trends occur and reverse within a shorter time frame, often from a couple of weeks to a month or so. At the beginning of this type of trend, it may or may not be apparent if the current trend will peak and reverse in the short term or last long enough to be classified as a primary trend.

Secular market trends are not always differentiated from primary trends, but investors and brokers who accept the idea tend to identify it as a primary trend that has continued for a minimum of five years. It is not unheard of for a trend of this type to continue on for as long as 25 years.

Regardless of current market trends, it is possible to make investing decisions that create a reasonable return. The key is to identify the current trend that dominates the stock market, accurately project how long it will last, and position investments in a manner that will eventually yield a desirable amount of revenue. By choosing the right stocks at the right time, it is possible to ride out a downward trend with little or no loss in the worth of the investment portfolio and be in an ideal position to make a great deal of money once the market begins to move upward once again.

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Discuss this Article

anon271650
Post 5

What about the short-term trend and long term trend market of e-book and e-book reading devices?

anon268211
Post 4

What about food market trends that sell food of familiar favorites with a twist? What is the reason for its popularity?

subway11
Post 3

SurfNTurf-

I love their new menu. They really cannot be blamed for people being overweight because they offer a lot of healthy options.

I know that with respect to apparel trends many Buyers have to forecast market sector trends for the future and purchase their merchandise assortment from vendors based on these trends.

Many Buyers from retail stores often go to Europe to see what the fashionable trends are there and then order from vendors in the garment district in New York City.

This can be stressful because the Buyer has to forecast what they feel would be popular in the United States several seasons in advance.

Departments like juniors are one of the hardest to buy for because the trends can change so quickly. If the Buyer miscalculates and selects merchandise that does not sell, the gross margin for the retailer goes down, the store loses money and the Buyer may be out of a job.

Being a fashion Buyer sounds glamorous but you really need a keen eye for apparel market trends as well as excellent negotiation skills.

surfNturf
Post 2

Cafe41-The market leaders were Dunkin Doughnuts and Starbucks who both boast of a wide variety of coffees.

Mc Donald’s now offers lattes, iced coffees, cappuccinos, and in some markets they offer espresso shots.

In addition, Mc Donald’s added healthier menu items to give health conscious consumers a reason to eat at Mc Donald’s.

For example, they offer oatmeal, yogurt parfaits, smoothies, and apple dippers as well as a variety of salads and grilled chicken wraps.

Also, they removed the Trans fat in their French fries because the market trends analysis was moving in that direction for all fast food restaurants.

cafe41
Post 1

Market trends research determine what the prevailing attitudes towards certain products or services are and consumers inclination to buy them.

For example, significant fast food market trends involve the expansion of the breakfast menu along with the additional assortment of healthy menu items.

The breakfast menu really represents about 40% of the daily revenue from Mc Donald’s. They realized early on the beverage market trends to specialty coffees were growing and they needed to expand their menu offerings in order to compete in these market sector trends.

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