Tuesday, June 9, 2020

Mind The FANGs

The stock market has rebounded in an astonishing fashion. But how?  In one acronym, FANG.

While other shares have mostly languished, shares of Facebook, Amazon, Netflix and Google have way outperformed and now make up 12% of the entire capitalization of S&P 500.  Yes, 0.8% of the companies move 12% of the index, a gearing  ratio of 15x. Remember, too, that S&P 500 is capitalization weighted, meaning that as FANG shares rise their impact on the index rises even more.

On the fundamentals, FANGs account for 4% of earnings and just 0.4% of sales.



For more on the subject, take a look at this report recently issued by Yardeni Research.





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