Impact Capital’s quarterly research report seeks to highlight the latest developments most relevant to your investments and financial planning. In this installment of Three Market Themes, we focus on the importance of stock diversification, the downwards trend of cryptocurrency value, and the two investment trends to keep an eye on this year.

1. Stock Diversification Matters

Diversification means spreading your investment risk over a large number of individual securities. The hope is that the value of some assets will rise to balance out those that fall.

Peloton Interactive, Inc. peaked on January 14, 2021. The Russell 2000 Growth index peaked February 10, 2021. The Russell 3000 peaked on January 4, 2022. Being diversified means not allowing one stock to make or break your portfolio.

2. You Can’t Spell Crypto Without Cry

The chart above shows the price trend of Bitcoin dating back to late 2017.

There have been four significant sell offs over this time period marked by the red and green arrows:

Year Percentage
2018 (-84%)
2019-2020: (-72%)
2021: (-55%)
Current: (-52%)

We don’t believe you have to have exposure to such a volatile asset. Based on history, it may have more to fall before stabilizing.

3. Two Trends To Watch In 2022

Since 2008, two investment themes have remained constant:

  1. Large growth stocks have outperformed large value stocks;
  2. U.S. stocks have outperformed non-U.S. stocks.

While we have already had a value bias in the portfolio since 2020, we will be monitoring whether it should be larger. We will also be monitoring whether it is time for non-U.S. stocks to start outperforming U.S. stocks.

Categories: Newsletter


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