Trendsetting

In the world of trading and investing we are all familiar with trend following methods. I decided to look at trends differently and therefore plunged into Robyn Waters’ book The Trendmaster’s Guide: Get a Jump on What Your Customer Wants Next (Portfolio [Penguin], 2005). Waters spent over ten years with Target, eventually leaving her post as Vice President of Trend Merchandising to strike out on her own. Her book is organized along the lines of a reading primer—that is, A is for ANTENNAE, B is for BIG PICTURE, C is for CONNECT THE DOTS, etc. In this post I’m going to pull out some insights from the world of merchandising that I think are applicable to trading and investing.

A: Looking for the next big thing? “Chances are you’ve already seen it. What you need to do is let yourself recognize it. . . . tune in to the little things, the trivial nuances, and the irrelevant data that everyone else misses.”

B: There’s a deluge of confusing options. “Combine this overwhelming input with type-A personalities who obsess over details, and you have a bad retail recipe: over-designed products that spring from over-conceived strategies.”

C: “An interesting fact catches your attention. A related tidbit pops up out of nowhere. A random comment reinforces a budding thought. . . . Connected, a pattern emerges that often points to a developing trend—in time to do something about it.”

F: “Trends with real staying power are often a series of smaller trends fused together.”

I: “. . . all analyses measure results only after something has already happened. Trend tracking speculates about what might happen based on things that are constantly changing. Following your intuition and listening to your instincts have been all but forgotten in today’s corporate environment. If it weren’t for visionaries who knew how to go with their instincts, we’d be living in a world without Post-it notes, FedEx, and Starbucks double tall skim lattes. . . . Einstein was a pretty smart guy. He believed that ‘not everything that can be counted counts, and not everything that counts can be counted.’ Remember that the next time you are plowing through piles of data and feel out of touch with your gut.”

K: Once again, keep it simple.

L: Lighten up. “When you’re stuck in a dark place void of ideas, lighten up! Have some fun. . . . Deep-six your standard procedures and try operating with a little humor.”

O: “Learn to let go of your preconceptions. Practice unlearning. Stop looking for the answers you expect to find, and instead, identify and pay attention to the signposts and the indicators. Let them lead you to where the minute is going.”

T: “Avoid literal translations of any trend concept or hot idea. It’s hard to differentiate yourself when you merely copy what’s already out there. Think about how a musical score translates notes and sounds into emotion. There are a limited number of notes, but musicians have been arranging them into endless versions of original music for centuries.”

V: “Trend trackers and creative types tend to be very curious people. . . . In the knowledge economy, if you’re not learning on a continual basis, chances are you won’t be earning much either. . . . Read, learn, do, explore, experience, but most of all read. And I mean books.”

Y: “Y is for YUM, YUCK, AND YAWN.” “Yum, yuck, and yawn are critical elements of what I call the Trend Taste Test. They are descriptions of how our gut feels when we are struggling with an imminent decision. It’s been proved that in the realm of complexity, good decisions come from the informed gut. In other words, once you’ve done your trend homework and something feels right, that’s your intuition saying Yum—go with it! If it doesn’t feel right, that’s a Yuck—forget it. And a yawn? If you’re bored, don’t you think your customers will be too?”

And finally Z (for Zen). “Just when you think you have a trend figured out, beware!” For instance, sales of video games and old-fashioned board games skyrocketed at the same time. And women who put only the best organic foods into their stomachs think nothing of getting Botox injections. “Don’t get caught up in absolutes. Learn to be comfortable with utterly opposed trends. . . . F. Scott Fitzgerald said, ‘The test of a first-class mind is the ability to hold two opposing ideas in the head at the same time and still be able to function.’ Learn to practice the Zen of Trend.”