For much of the past four or five years, Facebook, Apple, Amazon, Netflix, and Google (or Alphabet as it is now known), the so-called FAANG stocks have captured investors’ imagination. This selection of tech giants has led the market higher, helping the S&P 500 reach new highs as other companies have floundered.
Tencent, Alibaba, TSMC and Samsung have achieved the same halo effect in Asia. Between the beginning of February 2016 and their peak earlier this year, these four companies added a combined $1.1 trillion in market value.
Unfortunately, investors have been just as eager to sell these stocks on the way down as they were on the way up.
Since topping out earlier this year, these four Asian tech giants have lost a combined $506 billion in market value. Tencent has suffered more than any of its peers, according to an analysis conducted by analysts at CLSA, the decline in market value from 2018’s peak, as a percentage of the firm’s market capitalization in February 2016 is 135%. In other words, in just a few short months, selling has wiped out around two years of gains.
It is not just the Asian giants that are suffering. FAANG stocks are also feeling the heat. Combined, these two groups have seen $1.2 trillion in market value wiped off their shares since peaking earlier in the year.
Is this just a setback, or the beginning of something more serious? The team at CLSA believe there’s a 50/50 chance that we are at the beginning of a much more significant decline, a decline that could mirror the 2000 — 2003 market slide.
FAANG stocks have been responsible for a significant percentage of the S&P 500’s gain since the financial crisis. According to analysis carried out by CLSA, since March 2009, 25 companies in the S&P 500 have added $100 billion or more to their market caps.
Of these, only four have added more than $600 billion, Alphabet, Microsoft, Amazon.com and Apple.
The performance gap between this select group of equities and the rest of the market has only accelerated in the past two years.
At one point earlier this year, Amazon had added more in market cap than the combined value of Walmart, Target and Costco put together. Even though it’s off more than 25% from its highs, the stock is still up more than 32% in 2018.
Since March 2009, when the S&P 500 bottomed, only 38 of the 337 stocks that remain in the index have gained more than 1000%. Top four gainers are Fifth Third Bankcorp, NVIDIA, Amazon.com, and Expedia. These are the only stocks to have gained more than 2000% since March 2009.
Considering the outsized impact FAANGs have had on the market for the past ten years, CLSA’s leading technical analyst Laurence Balanco estimates that the chance of a 2000–2003 style market slide is now at 50%.
INFOGRAPHIC: How To Invest Your Money (In 8 Simple Steps)
Plenty of savers are making do with low rates of return on their deposits—almost eroding the value of their savings. Here’s a guide on how you should invest your money and gain some great returns off it.
Stock Trading: How to Choose the Best Online Brokers
Stock trading can be a risky business but done right it is an extremely lucrative investment option which yields excellent returns. It is true that trading is quite intimidating for someone who is new to the market and its ways which gives rise to the need for a good stock broker who can handle the job and ensure that the client gets the best returns possible for the money he or she is investing. But as a new investor it is absolutely important that you choose a very good trading broker. Here are some tips that will help you make that choice better.
Understand your trading needs
Before you even look into the services of a trading broker, it is essential that you are aware of your goals and needs from your stock trading. Firstly, prioritise your investment value, short term and long-term goal, and time that you are willing to spend on your trading in order to figure out where you stand. Now, narrow down on the specific kinds of stock exchange that you are looking into. With the wide variety of options available that you can choose from, it is important to narrow down to the specific field or fields and finally look for brokers who suit your specific needs.
Have a clear talk about trading fees
It is important to have a clear-cut discussion on brokerage fee and commissions that your broker will charge you. Ask about the charges per transaction, basic account charges, account minimums and even reimbursements if and when you choose to part ways so that you can have a proper idea about how much you are about to fork out for your trading. It is a good idea to have the talk beforehand so that you do not get into an arrangement which later becomes financially burdensome for you.
Look up reviews on the broker
You would not buy a new product without checking what its previous users have to say, right? Similarly, look up your prospective brokers No matter how promising or lucrative a broker seems with the terms, make sure you check the reviews by InvestinGoal to ensure that you are actually getting a good deal and not being sweet talked into not a good broker or even worse, being conned of your money.
Ask your questions
Do not be afraid to ask whatever questions that come to your mind before you make a deal. This will help you understand your trading better and thus, to get the absolute best out of your investment. It will also help you uncover any hidden charges, non transparent clauses as well that might have later hindered the desirable growth of your stock.
Give a test run
Ask the broker if you can give a test run of your account, and his technology before you actually invest your hard earned money. Many brokers allow you to create a free account which you can use to test their platform and check out user friendliness, ease of trading, quality of tools etc and thus, make an educated decision.
Getting the right broker is definitely one step towards a good stock trading investment. Therefore, it is very important that you take utmost care in picking the very best broker for your trading needs.
3 Simple Steps To Build Your Investment Portfolio
If you’re starting out with planning your investments, chalking out your goals and how you’d like to achieve them is incredibly important. You’ll need to understand what kind of assets you’d like to invest in–be it exotic instruments like private equity or the tried and tested ones like the treasury bonds, ETFs and stocks–and invest right. Here are three key strategies to build your portfolio:
1. Building Wealth Is All About Thinking Rationally (And Smart)
Having the right mindset can play a huge role in how you build your investments. It’s simply not just about strategy. To ditch following the latest fad in the market, you need to be responsible and have a sense of social indifference–coupled with confidence and patience.
2. Invest Like A Cheapskate
If you’re pumping in $150,000 as investment, on which you incur 1% as fees, look out for ways through which you can cut them down.
If you were to cut costs by a little more than a half, that’s saving you at least $1,120 in fees every year. But that’s not it–when this saving is compounded every year, that 1% fee can tally up to a million (if saved, could win you your big ticket to becoming a millionaire!)
3. The KISS (Keep It Simple, Silly) Rule
Funnily enough, most of us think investing your way through millions demands extensive knowledge of financial instruments or strategies. Surprisingly, it’s the simplest of assets that gave the biggest investors their biggest wins. Many successful investors highlight their success to stocks, bonds and other popular alternative investments, patiently held over time.