WHAT CAUSES TRENDS

What Causes Trends
March 06, 2008

An email in this morning:

"...but am basically trying to understand what creates a trend. My point is that deep fundamentals create a trend, as these guys are putting their capital to work. My grandfather ran a family farm in Louisiana for 60 yrs, and would take me to the Cotton Exchange in Memphis to trade cotton. He had a few guys he trusted over the years there. I always recall him asking what abc and xyz (large institutional cotton buyers) were doing every time we were there. I finally asked him why. He said that these guys get 500 calls a week from cotton detectives/analysts all over the U.S. and world, and therefore knew infinitely more about the demand and supply of cotton than he ever could sitting in Winnsboro, Louisiana reading the WSJ. and of course, he always traded along with the big guys. He knew to ride the wave, but the wave in his mind was created by deep fundamental research. Well, don't know if I have a point - maybe just an axiomatic observation that deep fundamental research causes trends. Fair?
I don't know that understanding what causes trends is important to making money from them. As to "what causes?", my best guess is that every link on this page goes a long way toward answering that question.