Sunnely Loc: Wisconsin

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Disclaimer: Opinions expressed here should NOT be construed in any way,
shape, or form as providing professional financial or investment advice.

-------------------------FAANG and FAAMG Stocks: Keeping a tight grip or losing their bite?-----------------------

Last week, Facebook was wobbled with a 19% plunge in share that erased roughly $120 billion of its market value.
(As a result, Facebook CEO, Mark Zuckerberg is about $16B poorer. Don’t pity him.
He’s still #6 on the list of world’s most richest men @ $70.3B. https://www.bloomberg.com/billionaires/ )
Amazon was down 1.8%, Alphabet (Google) down 2% and Netflix down 5%.
https://www.cnbc.com/2018/07/30/investors-flee-high-growth-tech-stocks-after-disappointing-facebook-n.html
(Twitter, not a FAANG stock was down 3%.)

However, just yesterday, it was announced that Apple became the first publicly traded company in the world
to reach a market value of $1 trillion (that’s with a capital T).
Note: After Apple, the race to $1 trillion include: Amazon, Alphabet (Google), Microsoft, Facebook,
collectively called, FAAMG – the 5 biggest companies in the U.S.
https://www.usatoday.com/story/money/2018/08/02/apple-first-stock-hit-1-trillion-market-value/877867002/

Abbreviations

FAANG – Facebook, Apple, Amazon, Netflix, and Google

FAAMG – Facebook, Apple, Amazon, Microsoft, Google

What’s your take on these business events?

1. Are we experiencing an “irrational exuberance” with these FAANG or FAAMG stocks?
2. Is this a sign that a tech bubble is on the horizon?
3. Should you stay the course or jump ship?

Thanks for your input.

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azted Loc: Las Vegas, NV.

I spend considerable time following the market. Over the past several years, the only consistent winners have been the FAANG stocks. Therefore, speculators keep them moving forward, as the companies themselves buy back their own stock. I have not been successful with Netflix, but Apple has been a winner for me as has Amazon. Google not so much. The tech stocks lead the market, as there is not much growth outside of them. The bank stocks seem to be the second best. There is not "irrational exuberance" if you look at the revenue and profits of these firms. As for me, I am proceeding cautiously, because there is still much growth ahead for these companies.

DirtFarmer Loc: Escaped from the NYC area, back to MA

I believe that PetroChina reached $1Trillion value in 2007, but crashed shortly thereafter.
Apple is the first US company to reach a market value of $1 Trillion (not adjusted for inflation), not the first in the world.

Sunnely Loc: Wisconsin

I agree. Adjusted for inflation, here's the list of companies which made it first to the $1 Trillion mark:

http://time.com/money/5282501/apple-trillion-biggest-companies-in-history/

Thanks for your input.

burkphoto Loc: High Point, NC

Anything can happen...

Warren Buffett’s Berkshire Hathaway has about $50 Billion in Apple stock.

Apple is one of the most under-estimated companies around. But they are very clever, and still trend upward, no matter how one of their products is selling at the moment. Look at their profits, cash on hand, and share buy-backs...

Sunnely Loc: Wisconsin

Yep! Warren Buffett, the old, wise man from Omaha still got it. His Berkshire Hathaway with $50B (5%) in Apple makes it the second largest shareholder.

As for Apple, they have several lucrative business services such as Apple Pay, AppleCare, iCloud, licensing service, and of course, the most dominant of all, iPhone.

Thanks for your comment.

burkphoto Loc: High Point, NC

Don’t forget the Mac, Watch, and Apple TV, and the recent deal they signed with Oprah Winfrey.

Sunnely Loc: Wisconsin

Yep!

If you have a good chunk of Apple stocks in your portfolio, you're set for life.

Just my own 2 cents.

rlv567 Loc: Baguio City, Philippines

Here's a bit of a different perspective - just today - from a wise man, many years experienced:

"Yesterday Apple became the first company in the US to boast a one trillion dollar market capitalization (=share price times outstanding shares). I find this milestone portentous as a buzzard roosting on my ridgepole."

"Apple is one of the FAANG (Facebook, Apple, Amazon, Netflix, and Google, now Alphabet) stocks into which investment interest has been concentrated, sort of like the Mortgage Backed Securities of 2008. This is investing on the theory that we can all get rich doing the same thing, which is a self-fulfilling prophecy until the buyers run out."

"I find this milestone portentous because it comes so long after Apple has ceased to be a pioneer and after it has begun producing overpriced products nobody wants. And Facebook (and Twitter) and Netflix have already broken down, and Amazon, the giant retailer with the microscopic margin and gargantuan ego, probably isn’t far off. Another Wall Street idol, Tesla, I won’t mention because it's too preposterous and ridiculous even to call an enterprise. Total hogwash, built on lavish government subsidies."

Loren

DirtFarmer Loc: Escaped from the NYC area, back to MA

"Past Performance is no guarantee of future results"

neillaubenthal

I want some of whatever you’re on...

>>
long after Apple has ceased to be a pioneer and after it has begun producing overpriced products nobody wants.
<<

Apple makes the vast majority of profit in the smartphone business. People are willing to pay a higher price because “it just works”. While Android OS ain’t too bad, it’s not as elegant as iOS is and since Apple does both HW and SW the integration is much more seamless.
If nobody wants them...I wonder why they keep producing record profits...seems the Apple naysayers are wrong once again...but then the company has been going out of business for 30 odd years now.
They are working on self driving car tech and AR/AI tech. Apple rarely invents anything...laptops, MP3 players, tablets, smartphones, wireless earbuds...all were around years before App,e actually made a huge commercial success out of them.
They’re not perfect of course...but they’re better than most.

Sunnely Loc: Wisconsin

Thanks, Loren for your insightful remarks.

I believe among the FAANG Apple has the best chance of surviving to the next century until someone comes up with a better and less pricey toy and/or until the government starts decimating it for "gobbling up" the competition and in the process, becoming "too big."

Just my 2 cents.

Hey, enjoying your stay in the Philippines? A beautiful country, friendly people.

burkphoto Loc: High Point, NC

Very true.

I do take issue with the fairy tale about Apple not being innovative under Tim Cook. They’re just quieter about it. Their sales, profits, net worth, cash on hand, and returns to shareholders have accelerated since Steve Jobs’ death.

The ecosystem Apple continues to build is like no other. What we will never see until very close to release are the new products they have in the pipeline.

Not every Apple product is a smash hit game changer like the iPhone. But if you take them all together... The watch works with the phone. The phone works with the Mac. The Apple TV works with...

We have yet to see so many of their ideas. The car project isn’t dead, just moving in a different direction. This should be a big year for the Mac.

Virtual reality is in its infancy, and Apple is a key part of it, with the recent announcement of VR Kit (Software Development Kit). And why would they have such a kit without hardware to use that software?

clickety

A number of years back Buffet was given massive publicity for giving his fortune to charity (in conjunction with Bill Gates as I remember). Now, I still don't understand. If he gave it away, he no longer has it. If he still has it, then he didn't give it away. Which is it? Was it true philanthropy or just just a tax dodge / publicity stunt? While accomplished at creating wealth he seems hypocritical much of the time.

burkphoto Loc: High Point, NC

The super wealthy know how to regenerate their pots of gold... or get others to do it for them.