How To Spot Themes Early
Being early to themes is one way you can unlock big gains.
If you’re early to a theme, you give yourself a shot at the biggest moves the market has to offer.
Anyone can buy once a trend is obvious, but by then you’re often late. The asymmetric part happens long before the crowd believes in the story. That is when you want to be positioned.
One thing I’ve always prided myself on is being early… I don’t like to chase with the herd, I like being involved before the story builds out completely. Whether it’s nuclear or quantum computing, I think my track record shows that I’m comfortable leaning into themes long before they’re “safe” or “consensus.”
Before getting into this piece, I want to highlight the six educational articles I have posted since starting this Substack:
My plan is to release a few of these each month. I’ve got a long list of topics lined up including what to look for when analyzing a companies fundamentals, combining technicals/fundamentals/thematics/narratives into a trade, the psychology of trading, how philosophy fits into the mindset of a trader, how to effectively use moving averages, identifying ideal entries during uptrends, and more. I have received very positive feedback on these pieces thus far so I suggest checking them out if you haven’t already. If there’s something specific you’d like me to cover, drop it in the comments, I read everything and I want these to be useful. The goal with this series is to build something long lasting that helps all of us trade better, think sharper, and approach the market with more discipline.
Now, lets get into how you can also spot these themes and ideas before the masses + which themes I think are set to really come on strong over the next year.
It doesn’t make much sense sometimes but reality is, the most explosive short-medium term gains in the market rarely come from companies that have already proven themselves. The biggest gains and movers often come from “speculative, narrative driven” companies. Think OKLO, IONQ, etc. over the last year or so. It’s difficult to wrap our heads around this because investing should be a facts based game… but in the short and medium term, it often isn’t. Instead, some of the biggest trades come from businesses positioned around themes that are still developing or based off the future… long before EPS, revenue, margins, or cash flow can justify the valuation. Traders who wait for fundamentals often miss the initial wave of discovery, excitement, FOMO, belief, etc. that drives the majority of early upside. That is where you want to be positioned as a trader. Nobody is saying that these stocks are long term investments or long term holds, but many of these can serve as explosive equity curve enhancers.