10/19/2017

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Investing In Fads

Fads come and go, and some people actually make millions of dollars on them. But many entrepreneurs end up losing money by jumping from one fad to another while trying to be the next one who makes it big.

Usually, when a fad becomes popular, those who get in on the ground floor are the ones who ride the wave to success. By the time the fad gains widespread popularity, the big profiteers are already entrenched and those who try to invest later may or may not become the big losers.

What are fads? Fads are temporary fashions or the prevailing tastes of the day, the latest rage, the in thing, the new look, or the latest styles. If it looks good on others or others have it , the fad becomes the thing that every one has to have, even it they don't particularly like it.

Fads aren't relegated to a specific industry either. There are toy fads, clothing fads, shoe fads, food fads, car fads, hair style fads, and there are even fads in the way we walk, talk, sing, and dance and list goes on and on.

Remember the flower children, pet rocks, 8 tracks players, mini skirts, hot pants, disco music, boom boxes, walkmans, betamax, valley girls, jheri curls, video arcades, and other fads that became popular for a few years and then faded away as quickly as they began.

As an entrepreneur, you have to remember that a fad is what it is, just a fad. Fads are popular just long enough for another fad to come along and take it's place. People lose interest in fads just as fast as fads become popular. So as an entrepreneur who might want to invest in a business venture, you have to be careful not to fall for every fad that comes along.

Blindly investing in fads will likely cause confusion and credibility issues with customers and other people to whom you may want to do business with or who may want to do business with you. If you happen to be the one who starts a fad and it becomes popular, you could make lots of money. But if you try to take advantage of an ongoing fad, you should pursue it with caution.

Not all fads fade quickly into the sunset. Some of them actually stick around for years, even after they lose their mass appeal. Remember Rubik's Cube and Cabbage Patch dolls. They were initially very popular, lost much of their initial appeal, and then reemerged as products that are briskly sold throughout the year, especially around Christmas.

Some fads disappear for years and then resurface from time to time. The hola hoop is a good example of products that makes a comeback in popularity every few years. So do roller skates and bicycles. Although Barbie dolls have been around for generations, they have their fad periods, gaining and losing popularity at certain times.

As mentioned above, the best way to capitalize on a fad is to become involved when the item first hits the market. If you wait too long, especially if the product has a short life span, you may end up losing money.

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