Sunday, February 28, 2016

The FANG Basket Of Stocks Gets Derailed

Investors not owning the basket of stocks know as the FANGs (Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Google (GOOGL aka Alphabet)) in 2015 likely trailed the return of the broader market. The average return of the FANGs in 2015 equalled 83% versus the S&P 500 Index return of 1.4%.

With the emotional propensity for investors to buy what feels good, if they purchased the FANG basket of stocks near year end, the return on these stocks has trailed the overall market return: -12.6% versus -6.4% for the S&P 500 Index since December 4, 2015.

The weakest link in this basket has been Netflix which has declined 27.6% since the December peak of the FANG basket. The best performing FANG stock since their December top has been Facebook returning 1.6% and outperforming the S&P 500 Index return of -6.9%. The S&P 500 Index has outperformed the other three FANGs, Alphabet, Amazon and Netflix.

Disclosure: Long GOOGL and GOOG

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