Continuing on from last week’s blog where we looked at the resurgence in the popularity of the Andrews pitchfork, this week’s focus is linked to how fickle is fashion, how suddenly things can change, and when to spot a turn in trend. What spurred me on was an article in the Financial Times Weekend issue on the 24th March 2018. Fashion Editor Jo Ellison wrote a delightful piece titled: ‘The Ugg-ly truth: Trump and the making of a trend’.
What I didn’t know was that whistle-blower Christopher Wylie, of Cambridge Analytica, had studied for a PhD in fashion trend forecasting at the London School of Economics. Ironically, this is where the STA teaches its Diploma Course! His premise: politics and fashion are essentially the same. She quotes him: ‘’Trump is like a pair of Uggs, or Crocs, basically. So how do you get from people thinking ‘Ugh. Totally ugly’ to the moment when everyone is wearing them?’’
Donald Trump’s then campaign team manager Steve Bannon ‘‘got it immediately’’, promptly looking to big data for the tools he needed. And, as they say, the rest is history. Facebook shares from $185 on the 16th March closed at $152 on Tuesday. They are not alone. Suddenly Tesla’s debt pile and ability to borrow on attractive terms were questioned by Moody’s. Driverless cars and the risk of crashing, killing, and liability insurance surfaced suddenly. Twitter and the likelihood of closer data security scrutiny suffered.
You might just summarise this in an ‘I told you so’ stance. You might say the same of crypto-currencies and block chain where a number of projects have been quietly mothballed. Or more simply: too darned expensive, which has been Warren Buffet’s view in 2017, ending up in him hoarding a pile of cash rather than buying any stocks.
On the other hand, if you’re a technical analyst, much of this will not have come as a surprise. You would have known that much of last year’s US stock index rally was down to Facebook, Amazon, Apple, Netflix and Google (now Alphabet). That parabolic rallies on that scale and valuations that high will end in tears; that followers of fashion are fickle; that the end might be nigh. Add it all up and now: look carefully at the daily, weekly, monthly and quarterly charts (on the 1st April) – and consider what Motley Fool might say.