Investing trends are a crucial element of investment decision-making. They can span a range of timeframes from short-term tactical movements to long-term structural changes in the economy and technology. They are often influenced by macroeconomic factors such as GDP growth, unemployment rates, and inflation; central bank policy; technological advances; demographic shifts; and geopolitical events. Investor sentiment and collective behavior also play a role.
A rising trend is a key driver for investing in global markets, particularly emerging and frontier markets. These regions tend to offer a more compelling valuation than US stocks, which are currently overvalued by historical standards.
Investors are also embracing ESG investing, which is growing in popularity among asset owners. A recent survey from Morningstar found that 70% of investors believe ESG factors will become more important in their fund selection process over the next five years.
As the economy continues to grow, investors are increasingly seeking alternative assets to diversify their portfolios. In particular, art and real estate have gained traction as viable alternatives to traditional equity and bond investments. The new market for fractional art ownership is being led by firms such as Masterworks and Freeport, which allow individuals to invest in pieces of artwork through shares that they can buy, trade, or sell.
Although identifying investment trends is a vital part of the investment process, they should not be considered an exact prediction of future performance. While observing certain negative trends (such as speculative bubbles or excessive leverage) may indicate elevated risk, market crashes are complex events with many unpredictable catalysts and unforeseen influences.