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%.
Video: Compound Interest, Explained
3 Ways To Invest From Your Smartphone For Under $5
The numbers say 80% of millennials don’t invest in stocks.
Reason? Half say they don’t have money, one-third says it’s too early and another third says they don’t know how.
In addition to that, there’s demographic gap. “The average age of a financial advisor is 55,” said Douglas Boneparth, a New York City-based financial planner. “There are more financial advisors over the age of 70 than there are under 30.”
Despite these beliefs, you don’t really need much money, nor experience, to get started. (Just look at our fearless co-founder Odunayo Eweniyi and what she’s pulled off here)
Be that as it may, here are three ways to get started for $5 or less.
What: A micro-investment app (iOS and Android) with over 30 ETFs according to industry, sector and risk tolerance.
How it works: Download the app and choose your investment.
Minimum investment: $5
Cost: Fees range from $1 a month for accounts under $5,000 to 0.25% a year.
“We help people who don’t have a lot save money on a weekly basis,” CEO and co-founder Brandon Krieg said in one interview. “Stashers look like America, they look like people you meet every day: they are nurses and teachers and Uber and Lyft drivers.”
What: iOS and Android app.
How it works: Download the app and choose one of six index funds. When you buy, say a cup of coffee for $1.75, it rounds up the change to $2 and deposits the difference.
Minimum investment: $5
Cost: Just like Stash, fees range from $1 a month for accounts under $5,000 to 0.25% a year.
“We’re not trying to preach austerity to the client, because that’s a bummer,” CMO Manning Field says. “Some people will say, ‘Don’t have the cup of coffee.’ We’ll tell you to have the cup of coffee and invest along the way.”
What: A commission-free investment app (iOS and Android).
How it works: Download and start buying stocks.
Minimum investment: Whatever stock you want to buy.
And by the way, if you want to get a fast start on real estate, here’s Forbes’ list of nine REITs with yields between 8% and 10%.
CHART: How Blockchain Powers Bitcoin
Blockchain, Bitcoin. Bitcoin, blockchain.
The two terms go hand in hand—and have become almost ubiquitous with this year’s insane rise (and fall) of Bitcoin.
But what does it all really mean? How does it come together? In this week’s chart, our friends at CB Insights break down exactly how blockchain powers Bitcoin.