DEFINITION of 'Investing Fads'

Investing fads are current popular trends that relate to investments. Investing fads are normally characterized by a temporary excessive enthusiam for a certain investing style, which is usually unsustainable in the long term. The dot-com bubble was an example of an investing fad where investors were more inclined to purchase a stock if its business had even the slightest exposure to the internet. That fad ended with the dot-com bubble burst.

BREAKING DOWN 'Investing Fads'

Fads are sometimes confused with trends, but there is a major difference. Trends tend to persist over the longer-term and are usually based on fundamentals, whereas fads often die down after a shorter period. When investing, it is helpful to understand whether you are participating in a fad or a trend.

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