Identifying a major investment trend before it hits the mainstream feels like finding buried treasure. Early investors in companies like Amazon* or Tesla* saw their portfolios appreciate significantly because they recognized these companies’ potential for disruption before everyone else.
The allure is undeniable. The ability to spot emerging shifts is a powerful skill. But for the individual investor, the practical reality of searching for the "next big thing" can be exhausting and risky.
While it could be possible to spot trends early, executing a strategy to potentially capitalize on them requires time, expertise, and emotional discipline that most retail investors don't have. Fortunately, there’s another way. It involves moving away from the frantic pace of chasing trends and toward a philosophy of long-term business ownership.
To have the potential to successfully spot emerging trends independently, retail investors essentially need to become a full-time investigative journalist, data scientist, and MBA all rolled into one. The standard advice for spotting trends usually involves a long list of tasks:
Monitoring industry news: Read specialized trade publications for multiple sectors, not just general financial news.
Tracking scientific research: Delve into dense academic journals to find technologies that are years away from commercialization.
Analyzing consumer data: Interpret shifts in consumer spending and social media sentiment.
Following the "smart money": Track venture capital flows and private equity funding rounds on platforms like PitchBook or Crunchbase.
For a professional analyst (who often specializes in only one sector), this is another day at the office. For an individual investor with a career, a family, and a life, this could be an impossible job.
Even if you manage to spot a trend, there’s a second, more dangerous hurdle: timing. Many trend-spotters buy assets that are rising and sell them when they fall. This approach means you have to be right twice: once when you buy and again when you sell. Miss the exit, and you could see your gains evaporate as quickly as they arrived.
We believe there’s a more sustainable way to invest in emerging trends—one that doesn’t require perfectly timing the next breakout or constantly jumping in and out of positions.
At its core, this approach starts with a simple mindset shift: investing isn’t about trading symbols on a screen. It’s about owning pieces of real businesses. Whether you own an individual stock or an ETF, you’re ultimately betting on companies—their products, leadership, and ability to create value over time.
This is where ETFs can play an important role. A well-constructed ETF can offer exposure to long-term themes—like technology shifts, demographic changes, or new industries—while still preserving foundational investing principles like diversification, discipline, and minimizing volatility. Instead of trying to guess which single company will win, ETFs let you participate in a broader trend without putting all your chips on one outcome.
Just as importantly, this mindset moves the focus away from timing the market and toward time in the market. Long-term ownership allows compounding to do the heavy lifting, rather than relying on perfectly executed buy-and-sell decisions.
The goal isn’t to catch a wave and jump off before it crashes. It’s to stay invested in businesses that can keep moving forward—even when conditions change.
Of course, not all ETFs are created equal. With thousands of publicly traded companies—and hundreds of trend-focused funds—you can’t assume that buying exposure to a hot theme automatically means buying quality.
That’s why it may help to look beyond the label and focus on what’s actually inside the fund.
High-quality ETFs tend to emphasize:
Some ETFs apply more discretion than others, narrowing their holdings to a smaller group of higher-conviction ideas rather than owning everything in a sector by default. This potentially could help reduce exposure to weaker companies that happen to be adjacent to a popular trend but lack staying power.
If you want to take a more intentional approach, it can be worth paying attention to a few additional characteristics:
ETFs with fewer holdings often reflect stronger views about which companies truly matter. While concentration increases risk, it can also signal that the fund isn’t simply mirroring an index—it’s making deliberate choices.
Funds that look meaningfully different from broad market indexes may offer exposure you’re not already getting elsewhere in your portfolio.
High turnover can quietly eat away at returns through transaction costs and taxes. ETFs that hold positions longer could be better aligned with long-term ownership and compounding, rather than reacting to every headline.
Taken together, these traits can help distinguish ETFs designed to own businesses from those designed merely to chase trends.
The takeaway isn’t that trends should be avoided. It’s that trends are best approached with patience, structure, and a long-term lens. You don’t need to predict the future exactly—you just need a process that lets strong businesses do what they do best over time.
At Motley Fool Asset Management, we believe in high-conviction investing through ETFs. Explore our lineup of ETF strategies to find one that may support your long-term goals.