Long positions: $GOOGL, $BRK.BNot so FAANG-tasticAs markets continue to implode around us, it is easy to forget the propellants which powered the bull market in recent years.
One of these major propellants has been the famous collection of FAANG stocks (Facebook, Amazon, Apple, Netflix and Google/Alphabet).
These high-performing mega-tech companies have made life miserable for active investors, particularly mutual fund managers with a “value” focus.
Outperforming the Samp;P has almost become a binary question: if you were overweight FAANG or tech, you probably succeeded. If you didn’t, you probably failed.
Since the FAANG stocks tend not to fit into the value philosophy of “cheapness” (relative to traditional metrics), and since having an overweight position in the very largest components of the benchmark index is not the typical behaviour of an active manager, the vast majority of US active managers have underperformed the Samp;P.
I’m one of those investors who has mostly failed to participate in the tech boom. I’ve watched with incredulity as the NASDAQ Index has multiplied investors’ money many times over. I continue to believe that there are huge valuation bubbles in tech, with over-optimism existing on a grand scale (though recent market falls suggest that the tide…
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