Trend Chasing, AI, and Candy Corn
We’re not the first practice (or the hundredth) to caution investors against chasing trends. When the topic comes up, people often cite studies about the perils of trying to time the market. Those who try usually end up with smaller returns than those who don’t.1 Those studies are real and worth reading, but they’re usually looking at downstream results, rather than illustrating why that outcome is so common to begin with.
This past week, we stumbled across two stories that help illustrate the why, not just the what.
The first story has to do with AI, and the second is about candy corn (yes, seriously).
We’ll start with the tech sector. One of the best-known AI companies of today started with a different goal than they have now. For over a decade, they were known for PC parts, specifically graphics cards. They were seen as a well-run company, but few could have predicted the transformation they’d undergo during the AI boom. There’s a reason for that. It wasn’t just their planning, but also factors out of their control. A big one being ChatGPT hitting the market in 2022. Suddenly, they had the chips that countless data centers needed to stay in the AI game.
On to candy corn (bear with us).
For decades, the stuff has been synonymous with autumn and Halloween. But get this: it wasn’t a Halloween candy when it first hit the market. That part came much later.
Candy corn traces back to the late 1800s. Any product that survives that long is probably doing something right, but its success was more than good planning (see the pattern?). Three external factors changed the playing field, which put candy corn in a strong position: trick-or-treating became more popular, people moved away from homemade treats toward premade options, and candy corn’s color scheme happened to be a match for autumn.2 Who could have guessed outside factors would have aligned so perfectly?
Studies are great tools. But studies alone don’t show why it’s difficult to chase stock trends, and why companies’ sudden successes (or dropoffs) can’t be predicted. It’s not just out of our control, but out of the companies’ control to some degree as well.
Think of the old cliché: “Luck is just preparation meeting opportunity.” We can appreciate a company succeeding in the preparation department, but it’s a difficult thing to guess when an opportunity shows up, or what it even looks like. Did the people making candy corn know those colors would help make it ubiquitous? Did that AI company know ChatGPT’s launch was the moment that would change their whole playing field? We think the answer, on both counts, is no.
They were forward-looking and well run. But they were also in the right place at the right time. Which brings us to one last cliché: “If you’re not in it, you can’t win it”. It’s applicable to both sides. If companies don’t survive long enough, they’re less likely to have one of these lucky moments. And for investors, not every company in our portfolios will have that kind of luck. But if we’re always chasing trends, we’re less likely to hold stocks long enough to benefit from those rare moments where outside forces perfectly align.
*This material is intended for informational and educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.
*Past performance is not indicative of future results.
*Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), Member SIPC. Laurel Financial Group is a separate entity from WFAFN.
1 Morningstar's annual Mind the Gap study compares the returns funds report with the returns their investors actually earn, and attributes the difference to the timing and size of investors' purchases and sales. Morningstar, "Mind the Gap 2026," https://www.morningstar.com/en-us/business/insights/research/mind-the-gap
2 Candy corn was invented in the 1880s. Trick-or-treating treats were largely homemade until the 1950s, when candy makers began promoting their products for Halloween and candy became the convenient choice. History.com, "The Haunted History of Halloween Candy," https://www.history.com/articles/the-haunted-history-of-halloween-candy
This past week, we stumbled across two stories that help illustrate the why, not just the what.
The first story has to do with AI, and the second is about candy corn (yes, seriously).
We’ll start with the tech sector. One of the best-known AI companies of today started with a different goal than they have now. For over a decade, they were known for PC parts, specifically graphics cards. They were seen as a well-run company, but few could have predicted the transformation they’d undergo during the AI boom. There’s a reason for that. It wasn’t just their planning, but also factors out of their control. A big one being ChatGPT hitting the market in 2022. Suddenly, they had the chips that countless data centers needed to stay in the AI game.
On to candy corn (bear with us).
For decades, the stuff has been synonymous with autumn and Halloween. But get this: it wasn’t a Halloween candy when it first hit the market. That part came much later.
Candy corn traces back to the late 1800s. Any product that survives that long is probably doing something right, but its success was more than good planning (see the pattern?). Three external factors changed the playing field, which put candy corn in a strong position: trick-or-treating became more popular, people moved away from homemade treats toward premade options, and candy corn’s color scheme happened to be a match for autumn.2 Who could have guessed outside factors would have aligned so perfectly?
Studies are great tools. But studies alone don’t show why it’s difficult to chase stock trends, and why companies’ sudden successes (or dropoffs) can’t be predicted. It’s not just out of our control, but out of the companies’ control to some degree as well.
Think of the old cliché: “Luck is just preparation meeting opportunity.” We can appreciate a company succeeding in the preparation department, but it’s a difficult thing to guess when an opportunity shows up, or what it even looks like. Did the people making candy corn know those colors would help make it ubiquitous? Did that AI company know ChatGPT’s launch was the moment that would change their whole playing field? We think the answer, on both counts, is no.
They were forward-looking and well run. But they were also in the right place at the right time. Which brings us to one last cliché: “If you’re not in it, you can’t win it”. It’s applicable to both sides. If companies don’t survive long enough, they’re less likely to have one of these lucky moments. And for investors, not every company in our portfolios will have that kind of luck. But if we’re always chasing trends, we’re less likely to hold stocks long enough to benefit from those rare moments where outside forces perfectly align.
*This material is intended for informational and educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.
*Past performance is not indicative of future results.
*Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), Member SIPC. Laurel Financial Group is a separate entity from WFAFN.
1 Morningstar's annual Mind the Gap study compares the returns funds report with the returns their investors actually earn, and attributes the difference to the timing and size of investors' purchases and sales. Morningstar, "Mind the Gap 2026," https://www.morningstar.com/en-us/business/insights/research/mind-the-gap
2 Candy corn was invented in the 1880s. Trick-or-treating treats were largely homemade until the 1950s, when candy makers began promoting their products for Halloween and candy became the convenient choice. History.com, "The Haunted History of Halloween Candy," https://www.history.com/articles/the-haunted-history-of-halloween-candy