Friday, 27 May 2022

Early Adopters and Laggards


Those of you whole have studied Marketing should know this Diffusion of Innovation Theory chart below:

We too can use this theory when it comes to investing, trading, and speculations - any poisons and vehicles also can!

Next time you buy a stock, ETF, bond, or even contemplating joining the 1M65 crowd, ask yourself, where do you think you fit on the chart above?

Are you the early adopters? (Yeah, you're the influencer or opinion leader)

Part of the early or late majority? (The parrots; the copy cats; you jump, I jump)

Or are you the laggards? (Don't believe, don't believe...Then FOMO!)

Eh... Why did I leave out innovators?

Let's get real lah. If we are innovators, we'll won't be here at this watering hole! Tio bo?

If we wear the white hat, we would be so busy as entrepreneurs at our startups...

If we wear the black hat, where got time to read blogs when we constantly need to come up with "new bottle; old wine" scams to con bei kambings?

I'm not going to write too much on theory. You know, a summary of a summary of a summary... 

Those of you interested in the Diffusion Theory in greater depth would do better to go direct to the source instead! 

People study this in universities OK?

Some of you are probably using the Diffusion Theory already in your investing right now. If you feel like sharing, come share!

Some may be seeing this Diffusion Theory Chart for the first time... (You may want to reflect on it if you invests or trades a vehicle that's completely new to you, but others know it inside out...)

I'll start first!

You know why I blog and read investing/trading blogs and forums?

It's to spot early adopters and laggards.

I use them as my "qualitative" indicators. Wink.

Your turn!



  1. Smol,

    Long-time investors will be more familiar with this chart lol.

    We've all been there in the greed, delusional, denial, scared until pang sai, and capitulation phases!

    That's why old investors with scars all over their faces & bodies and 8 teeth knocked out of their mouths are always preaching about risk management (the ultimate being those who've already chopped fingers long time ago).

    You can be an early adopter & yet end up as laggard.

    That's what happened to Sir Isaac Newton.

    Note the trademark vertical parabolic move & the break of the uptrend line.

    The support line is kinda hindsight (in fact I don't see any support lol). But perhaps can be seen as trailing stop ... a wide -30% trailing stop for a super speculative stock --- and thus necessitating small position sizing.

    1. Spur,

      Yes, that different phases of a Bull/Bear cycle chart is more well known.

      And I've poked at it in my All Time Highs; All Time Lows

      It can be very academic... I mean it doesn't matter whether its all time high or all time low - if we not taking any actions whatsoever!

      The Diffusion Theory is more about self awareness - what edge (if any) you have over others - and our READ of all the other market participants out there.

      I mean would anyone play mahjong or poker with real money if they knew their opponents were pros or hustlers?

      You think why they have the handicap system for golfers with different skill levels to level the playing field?

      Do we have a similar handicap system in the stock markets?

      You think why vested interests are so eager to make investing/trading so easy?

      Look! Anyone and everyone can do it! Stocks always go up one lah!

      The investing/trading arena is not like driving - where we give chance to L drivers or those with that Probation Triangle sign.

      When wolves and sharks spot bei kambings stupid enough to advertise the L driver or Probation plates over their heads, lagi will pounce on them for the free meal!

      Give chance? Wait long long....

  2. Newton didn't do his calculation on his risk Mgmt and position sizing? Inverted pyramid investing in Bull run?

    1. CW,

      That's the difference between left-brained people (see precision in numbers) and right-brained people (read between the lines).

      To literature/history arts stream people like me, all I see is Newton cannot stand losing to "friends" he considers his intellectual inferior...

      When he wrote he couldn't calculate the madness of people, I suspect he felt more pain knowing he had "capitulated" to his friends' emotional level more than the actual financial loss...

      Today we say EQ. I mean other people can go mad that's their own business, but do we have the emotional strength to not succumb to Fear Of Missing Out when its our turn?

      As for Newton, he's done very well financially.

      He got a GREAT day job - he later became the Master of the Mint.

      That's the power of Earn More!


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