As long as there are egos eager to boast about their latest wins, investors will always tout the newest investment trend and how they got in on the ground floor. Thematic investing—focusing on specific trends, industries, or societal shifts—is nothing new. History is filled with investment themes that either reshaped industries or fizzled out before reaching their potential. The key question remains: How many of these trends truly pan out, and how many leave investors chasing a fleeting narrative?
Consider the dot-com bubble of 1995–2000. One small company, with a market capitalization of $438 million, launched its initial public offering at $18 per share in May 1997 and grew steadily. When the dot-com bubble burst, its stock price fell to just under $7 per share. The company didn’t have a fully profitable year until 2003. You might know this company, Amazon.com. While companies like Amazon, eBay, Google, and Priceline found long-term success, others—such as Pets.com, Webvan, eToys.com, and Go.com—failed.
More recently, Beyond Meat made headlines as a leader in plant-based food, expecting to be a considerable disruptor in the industry. However, its target market—vegetarians and vegans—represents only about 6% to 7% of the U.S. population. The stock is now down 98.5% from its all-time high, trading at just $3.26 per share. It would need to gain more than 7,100% just to break even with its all-time high.
While every year seems to bring a new investment theme promising transformative change and lucrative returns, thematic investing has been around for decades. In the 1950s, the trend was European stocks. The 1960s saw investors flock to the “Nifty Fifty,” a group of large-cap stocks widely regarded as blue chips. In the 1970s, interest shifted toward emerging markets and commodities. The 1980s witnessed a surge in Japanese stocks, with the Tokyo Stock Exchange briefly surpassing the U.S. equity market in value. The 1990s were defined by the dot-com boom, with the 2000s focused on the BRIC countries—Brazil, Russia, India, and China.
Since the pandemic, investment themes seem to change more frequently, with artificial intelligence, biotechnology, and memecoins all making headlines. It’s impossible to predict which companies will withstand market fluctuations and build sustainable businesses that continue to innovate and generate revenue. However, that doesn’t mean you’ve missed the boat on success—a strong company will continue to provide growth opportunities over time.
We strongly recommend a diversified portfolio of high-quality stocks—that can endure not only the next recession but also the next depression. We focus on the fundamentals, analyzing a company’s core financial and business metrics to determine its intrinsic worth and long-term potential. We evaluate financial strength, dividend quality, projected annual earnings, and valuation.
Sometimes, we’re wrong and miss out on meteoric rises. But if the fundamentals weren’t there from the start, how could we have known it would become a star? Why risk chasing lightning in a bottle with start-ups or the latest trend that promises to change the world when your retirement and financial future are on the line? A conservative approach may not be as exciting, but it often has a higher probability of success.
If you have questions about the stocks you own in your portfolio, the experts at Henssler Financial will be glad to help:
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This article is for demonstrative and academic purposes and is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
