TREND TIP 1 Play the Six Degrees of Making Bacon The Ripple Effect of Trends Most people are familiar with the party game Six Degrees of Kevin Bacon: "I'm friends with Sally who has a cousin who designs sets for a director who works with Kevin Bacon." The point of the game is to link any person to Kevin Bacon through six steps or less, and it illustrates the larger "Six Degrees of Separation" theory that every person in the world is only six contacts away from knowing every other person in the world. I have made millions by making a different set of connections and connecting the dots to an overlooked pot of gold. One of my most valuable techniques for picking stocks is to look for the "unlikely suspects." These are the companies that thrive as a supplier or the ancillary beneficiary of a trend, societal change, or economic or political driver. While social scientists have studied how we as people are interconnected, little research has been dedicated to the significance of the relationship chain in financial trends. Economists have drawn up complicated equations for many economic models, but how an obvious trend causes other trends is relatively uncharted territory for even the professional investor. As a result,mapping out causal connections in trends might be one of the best kept secrets to identifying and profiting from these trends.

The party game's goal is getting to Kevin Bacon in six steps. In financial trend spotting, finding a service or product that's separated -- whether by two, three, or six steps -- from a clear trend can lead to a great investment. For that matter, identifying a company even farther separated, whether 10, 15, or 20 degrees, can sometimes be profitable. The best part is that it isn't rocket science. Take the case of corn ethanol. With the rapidly growing interest in ethanol as a more environmentally friendly substitute for gasoline in the last few years, corn prices have skyrocketed. Many investors have jumped to make money off this trend. By now, the prices of corn have already jumped, leaving less potential to profit off the trend.

Rather than trying to get in on something that has already become highly valued, you can make better money by applying the Six Degrees of Making Bacon principle, and investing in more affordable options that will benefit from the newfound popularity of corn. While everyone and their brother will be investing in the trend itself, you'll be surprised how many people don't think to invest beyond the trend. If demand for corn has risen dramatically, farmers are going to be trying to meet that demand. What products or services do they need in order to increase production of corn? For one, they're going to be buying new tractors and other farming equipment, as well as more pesticides and fertilizer. So you might want to look at companies like AGCO Corporation or John Deere, which make tractors, combines, sprayers, and other equipment. Or check out companies like Monsanto, which produces Roundup, a pesticide often used on corn and soybeans (another source of biofuels). Syngenta is another example: among other things, they develop high-performing seeds, including corn seed, and are creating a hybrid corn specifically for improved biofuel. Then there are middlemen like Archer Daniels Midland, which stores, transports, and processes agricultural products, as well as train manufacturers like American Railcar, which makes and services trains used to carry agricultural products.

The list could go on and on. Drawing Connections I find the easiest way to play the Six Degrees game is to draw diagrams. It's fun to uncover how an obvious trend has a ripple effect. You can usually find products, services, and companies worldwide in every direction that are positively affected by a trend. Don't just think in a linear way. The ripple effec.