To predict trends, you need to understand them. The fact is that all trends, whether in the stock market, crypto, fashion, entertainment, or art, operate according to the 'Acceptance - Diffusion Model' and are influenced by Crowd Psychology.
For example, in the fashion industry, the life cycle of a fashion trend goes through 5 stages.
Stage 1 - Initiation:
A completely new style is often initiated by a famous person/group with significant influence in society.
Stage 2 - Diffusion:
This style is embraced by people in fashion, entertainment, content creators, and mass media. These are individuals and organizations closely connected with the initiators. They have direct or indirect benefits from disseminating information. Therefore, they will actively engage, forming a network of information that tends to reinforce the consensus on that new style.
Stage 3 - Escalation:
When information about fashion style is disseminated, young people interested in fashion will receive the information first. This group of people is psychologically independent from the crowd, making it easier for them to accept new styles and ready to shop to quickly join the trend.
Stage 4 - Climax.
When the trend is accepted by the 'escalating' group, over time it begins to manifest clearly. At this point, ordinary people will be emotionally compelled. The more people seen in the new fashion trend, the more pressure there is for ordinary people to join the trend. Imitation and emotions help drive the spreading process to become stronger.
Stage 5 - Peak and Recession.
The final component is the backward people - they are generally uninterested and lack any understanding of fashion. Their decisions are based solely on basic motivations of fear and arrogance. They fear looking outdated, unattractive, and imperfect, hence their every decision aligns with the crowd.
One day, they notice the crowd around them (friends, enemies, neighbors, relatives, etc.) appearing in the new style - This creates a strong motivation for them to spend money on shopping. But the truth is they are buying something that is outdated, this fashion cycle has reached its peak, and all elements in society have joined the trend causing it to reach a state of saturation and recession. Meanwhile, the initiators have abandoned this style and started creating a new one.
By making a few small changes, you will be able to feel the signs when a trend begins to form/ends.
