Cover story
4 / 5
Anthony Luzio attempts to find out if anything
can stop the FAANGs
Immortal?
It was supposed to be the year
it all went wrong. As investors
piled into the FAANGs
(Facebook, Apple, Amazon,
Netflix and Alphabet [Google]) on
the back of both the longest bull run
and period of economic expansion
ever seen, value managers hung back,
warning there was only one way this
was going to end – and it wouldn’t be
a pretty sight. All it would take, they
said, was a recession to show what
can go wrong when faddish stocks are
“priced to perfection”.
While no one wanted to see a
pandemic, value managers hoping
that a period of economic turbulence
would finally prove them right were
certainly granted the first of their two
wishes, as the lockdown provoked one
of the deepest recessions in history,
preceded by a market crash on a scale
not seen since the financial crisis.
Yet while the FAANGs initially fell
with the rest of the global index, it
was these stocks that led the ultraspeedy
rebound. Four months on
from the bottom of the market, four
of this group of five are now at alltime
highs.
Not black and white
Of course, what no one could have
envisaged was that the economic
lockdown that caused the recession
would play into the hands of these
stocks by forcing even the most
stubborn luddites to embrace
technology on an unprecedented scale.
However, John Christy, investment
counsellor at Orbis Investments,
says that even before the crash,
anyone lumping all the FAANGs
in together was already on
shaky ground.
“There is often very little
room for nuance when it
comes to the [FAANG] stocks,”
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