From FAANGs to Granolas: Why Investors Love a Good-Sounding Trend

July 14, 2025

In the world of investing, there is always something trending and receives a lot of attention. 

Although I look youthful, over the past few decades, I’ve seen my fair share of these trends come and go. Here’s a list I’ve come up with:


  • Gold & Silver
  • Commodities & Forestry
  • Gamestop
  • Student lets
  • Crypto
  • Currency trading
  • Asian tiger shares
  • Dot com stocks
  • Commercial property
  • BRICS / Emerging markets
  • Work From Home stocks - Peloton, Zoom, DocuSign
  • Solar & Wind
  • Electric vehicles
  • Shortcut to long term returns - stock grouping like Nifty Fifty (50 popular U.S. growth stocks starting in the 1970s), FAANGs (Five dominant U.S. tech stocks), Magnificent Seven (7 mega-cap tech names) and Granolas (A group of European giants in healthcare, luxury, and tech).


These themes often ride a wave of hype, and spark fear of missing out, but the excitement rarely lasts.

The Speculative Urge

It’s completely natural to feel the “itch” when everyone seems to be profiting from a trend. However, if you’re tempted to pursue speculative opportunities, these should be carefully ring-fenced, with very strict risk controls.


A sensible rule of thumb? Limit speculative assets to no more than 10% of your net worth and even that’s quite bold.


We’ve mentioned this before, but if you are seeking higher potential returns, you have to accept higher volatility. You should consider increasing your risk appetite. If you want a portfolio beyond a 100% equity, consider responsibly increasing leverage into your financial plan.

Understanding the “Lottery Effect”

Why do investors like speculative investments? The answer often lies in what’s known as the “lottery effect”. When hopes and dreams of extraordinary gains are for sale, people overpay. These hopes and dreams are encouraged by “confirmation bias”, we hear about the spectacular successes, but not about the overwhelmingly larger number of losses. It's similar to someone claiming they had a winning strategy after hitting the jackpot.

Our Investment Philosophy

Rather than chase trends, our approach is rooted in global diversification—across sectors, geographies, and asset classes. This strategy naturally provides measured exposure to both current and future investment themes, without overcommitting to any one area.


We design portfolios aligned with your long-term goals and risk profile, ensuring a resilient foundation that weathers cycles and avoids unnecessary volatility.

Two Paths

To illustrate the point, consider two relatively extreme scenarios. In the first option, you invest £1m entirely into highly volatile assets like AI stocks and cryptocurrency. In the second, you instead borrow an additional £1m, using a loan with stable, fixed repayments and with no sudden demands of repayment—giving you £2m of total market exposure through a diversified portfolio. Personally, I’d choose the second option.


While both approaches involve higher risk, the second offers a far better balance of volatility, drawdown management, and recovery potential. It’s a more disciplined path to enhancing returns, rather than relying on the uncertainty of a single or few high-risk investments.

Familiar Names

Single stocks can experience a wide range of outcomes, and historically, only about 21.4% [Source: Dimensional, from CRSP/Compustat. US stocks with full monthly data; delists 200–399 = good, 400+ = bad. Outperformance vs. value-weighted market. Stats averaged over rolling multiyear period] of them both survive and outperform the market over a 20-year period. In contrast, a well-diversified portfolio is more likely to deliver consistent exposure to market returns over time.

 

These familiar names once commanded headlines, but they serve as reminders of how even well-known companies can underperform the wider market.


  • AT&T
  • Peloton
  • General electric
  • Nokia
  • Intel
  • Kodak
  • Zoom

Key Takeaways

  1. It’s not about which investment or sector is "best." – It’s about what's already priced into the market. The more hyped an investment is, the more likely future returns are diminished and how each decision to your portfolio aligns with your broader financial plan within the context of your personal risk tolerance, time horizon, and overall strategy.
  2. Your portfolio should be designed to prevent you from being scared out of the market. It should be built with discipline, resilience, and long-term thinking in mind—so you can stay invested through both calm and storm.


Risk Warnings:


The information contained in this article is intended solely for information purposes only and does not constitute advice. The price of investments and the income derived from them can go down as well as up, and investors may not get back the amount they invested. Past performance is not necessarily a guide to future performance.

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