What are Fang Stocks ?

“Market Fangs”

Some people may have heard the term, the “Markets Fangs”. Whilst the markets certainly have the ability to BITE, and indeed inflict considerable pain, this is not what the term “Fangs” refers to;

It is in fact; “FAANG” stocks and refers to Facebook, Amazon, Apple, Netflix and Google.

These 5 companies combined, not alone are having a profound impact of many people’s daily lives, they are also having a profound impact on the performance of the US Stock Markets. Such is their combined size that these stocks to a large extent dictate market performance, by their daily movement.

The S&P 500, or simply the S&P, is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices, and many consider it to be one of the best representations of the U.S. stock market.

Add Tech Giant, Microsoft into the mix however and these 6 companies, combined values, now represent in excess 20% of the S&P 500 Index. When one hears market commentators therefore reflecting the performance of the S&P or indeed the Nasdaq indices, often the underlying performance of either index is a function of the performance of these 6 stocks.

Whilst the S&P 500 overall is at this point, down less than 5% (See Graph below), for the year, notwithstanding the myriad of Covid related issues affecting the economy, the reality is that over 50% of companies, stock prices are still down over 20% this year alone, and hence significant elements of the markets returns have emanated from these 6 stocks, some hitting new all-time record highs!

This is all related to an item we mentioned in a previous blog, the growth in the companies, operating largely in the “work from home”, “play from home” and “deliver to home” sectors.

This is clearly borne out in the table below, with “stay at home” activities/products growing strongly while “back to business” activities/products are still in deep contraction:

Author: Ronan Goggin, B.A. Fin ACSI   Managing Director  

Direct Dial: 021-4521325 | E: rgoggin@olearylife.ie