The long-term benefits of following market trends

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When you already have a great deal to keep up with in the day-to-day running of your business, finding the time to keep up with market trends can be difficult.

The chances are that you watch the news and keep abreast of major developments in your sector, but how much time do you spend analysing it all, and how much do you take in about the wider economic picture? Understanding the long-term movement of the markets can make a massive difference to the long-term potential of your organisation. This article looks at some of the reasons why it matters.

Act before everyone else does

The first and most obvious reason why you need to stay up to date with market trends is that this places you in a position to buy or sell assets before other people do, getting ahead of long-term market shifts so that you can trade at the best prices.

It’s a myth that nobody predicted the 2008 global economic crash. In fact, most major industry slumps can be identified ahead of time if you’re paying attention to the right factors. Identifying these comes with experience. They don’t just enable you to take short-term actions to stay out of trouble but can also buy you the time to shift the focus of your company activities to make it more resilient when necessary.

Invest in growth areas

Just as watching the markets can keep you out of trouble, it can help you to take advantage of strong prospects for growth. These could be centred on a particular country or region (such as the Asian tiger economies of the late 80s and early 90s) or on a particular industry (such as the dot-com bubble of the same period).

Although they rarely last for more than a few years, getting in on the ground floor can enable you to do very well before the tide turns, and it also gives you a better chance of buying into the businesses that will survive and prosper afterwards. Other markets (such as biotech at the present time) offer slower growth prospects but more assurance of enduring returns.

Refine your networks

Success in business has a lot to do with personal connections. Being able to predict long-term market movements gives you time to build up connections in particular areas. You might also choose to refine your skills – for instance, by learning a new language or studying an emerging technology. This will place you in a strong position to develop business deals as growth develops. Other businesses won’t be ready, but you will know exactly who to talk to, and you’ll make the right impression exactly when it matters. 

Look like the business of tomorrow

Businesses that spend all their time playing catch-up and reacting to past events don’t make a great impression on potential trading partners or customers. If you can stay one step ahead, then it will not only give an advantage to your business in trading terms, but it will also enhance your reputation. This can help when you’re seeking investment and can push up your share price. Being able to speak authoritatively about the long-term direction of the markets at trade expos or in the media makes people see your company as one that they can trust.

How to keep up to date

Keeping up with trends isn’t something that an advisor can do for you, and it requires more than a single source of input. It starts with listening to your customers and encouraging them to give you feedback. They will often be aware of things that you miss.

You should also read trade journals related to your sector and keep up with the international media through different countries’ major press outlets (usually available in English translation). For great exclusives and finance news, try LeapRate, which will help you look more directly at a range of markets. Most importantly, keep it up over time, and read history books to improve your long-term perspective.

Today, a lot of financial decisions are made using computers that can crunch large amounts of data to come up with predictions. Impressive as this can be, however, computers can only “think” in a linear way. The intuitive capacity of the human brain enables it to generate insights as yet beyond the reach of artificial intelligence.

When you spend enough time following the markets and develop an instinctive understanding of how they move, you can do just as well as the big players who are able to make use of the best technology. It’s your diligence and understanding that can give your business the edge.

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