The stars of techie utopia in California no longer shine so brightly.
FAANG Stocks (Facebook, Amazon, Alphabet, Netflix, and Google) and companies have been mute investments over the last year, leaving investors scratching their heads over these once former golden goose investments.
Despite headwinds, they are at the forefront of American consumerism like no other companies before ‐influencing our internet searches, how we shop, and how we express ourselves.
For example, Jeff Bezos and the company still dominate our lives by shipping branded items with AWS world services and pushing proprietary products in Whole Foods. Facebook continues to upload pictures of your grandkids and sustain profit by data mining for its quarterly earnings.
Apple launched several new products that will make die‐hard fans scream joyfully to be first in line while Wall Street analysts cheer over the cost savings of rebranded items from last year.
The question remains: why isn’t technology leading our accounts higher to the promised land of investor bliss like in previous years? I believe there are several issues at play that can be remedied.
First, Trump Tariffs’ constitute a significant compression on manufacturing margins for Apple and Amazon products, which is a perceived risk for investors.
Second: Congress's push for stringent privacy laws on social media platforms, notably Facebook (which has been subpoenaed more than a Wall Street banker in 2008), hampered product expansion.
Third: One item no one really mentions is how Big Tech needs to revamp its cash flow and audit excessive spending ‐ especially Netflix! They burn through more money than Paris Hilton in Monaco. It's absurd!
So, what can we do? Several things that you may have noticed is that money has been rotating all year from the above sector to safe havens like consumer defensives, utilities, REITs, low volatility items ‐ which have been trending higher.
This approach does have a caveat emptor! If the above headwinds are resolved, money will quickly rotate back into items that are high growth in tandem with sectors that have been muted by external factors.
This move would closely mirror the post‐election market of 2016, when industrials, banks, and big tech rose very aggressively through year's end. I have done my research and have all the buttons ready to move faster than the Road Runner after the right signs.
I will be in touch to discuss your circumstances and risk tolerances. Cheers
Christopher R. Lakian
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