Peaked trends do not mean that you should not invest. There is potential at every part of the curve. What counts is making sure that the idea behind the investment or business is in tune with the diffusion position.
For example, laggards can offer an exciting niche opportunity because of a the fact we observed in Lesson #3 of this course:
One of the fundamental rules you can use to spot trends is that people always want what they have lost and no longer have. If you missed this lesson go to https://www.garyascott.com/archives/2004/04/23/1036/index.html
Take non-electric Aga stoves as an example. They are heavy, very expensive and are marketed on the idea that they have not changed one bit for 118 years. Yet Aga sells everything they make!
At times laggard products shift into a new trend and become hot again. For example we recently looked at how Pabst Blue Ribbon beer is having an unlikely resurgence. The beer was definitely in the laggard stage of diffusion and sales were headed downwards.
Then a few young consumers in Portland, Oregon started a new trend at Lutz Tavern when this local hot spot added PBR in 1999 to replace a discontinued regional brew.
Conditions for it to trend upwards again were just right. The 160-year-old brand was described as nostalgic and kind of hokey, plus is one of the inexpensive brands, a good thing in 1999 after the 1998 stock market crash. This seed of opportunity was fertilized by college students rebelling against the establishment including established name brand beer and by women who find most major brand beer advertising gender demeaning. See this whole message a https://www.garyascott.com/archives/2004/03/26/1022/index.html
So the beer caught a new trend and a new market.
The key is understanding where the product or service sits in the diffusion curve. If you are selling stoves or beer to an unlikely few laggards, you will have a different business than if you are selling a product or service where demand is rapidly growing.
Next time you look at an investment or business idea compare the way the business is oriented and make sure that it likely to fit the trend’s diffusion position.
Until next message, good investing!