Displaying items by tag: stocks

(San Francisco)

There is no doubt about it, the FAANG stocks—Facebook, Apple, Amazon, Netflix, and Google—were a huge force is delivering 2017’s great return. But it might be time to remove them from your portfolio, at least as Barron’s argues it. And if not removing them, then at least reducing exposure. The stocks count for a huge portion of many funds, so investors may have more exposure than they realize. The stocks have seen a massive run-up in valuation, but that makes them look increasingly vulnerable. Barron’s also cites the increasing risk of regulation of the sector, which could prove a weight on values.

FINSUM: The tech industry has grown very large and dominant, and seems to have its own cycle versus the rest of the economy, all of which makes it very hard to call a top. There are some dark clouds gathering on the horizon, but nothing looks like it is imminently going to bring the FAANGs down.

(Seattle)

If you listen to the media, Amazon is a retail juggernaut posed to swallow just about every industry. The company has lived by Bezos’ famous mantra “your margin is my opportunity”, and has thrived by dominating commoditized low-margin businesses. However, the company has some inherent limits and part of what has made it so successful is that not every industry is an Amazon industry. In particular, one area of retail the company may not be able to crack is high-margin uncommoditized business. These are not its forte, and driving down costs and making such goods widely available is not what drives value. That is why many luxury brands, for instance luxury handbag makers, refuse to sell on Amazon.

FINSUM: We will not put anything past Amazon, especially in its home turf of retail, but the company has not done well in moving into luxury. So what.

(New York)

While the economy seems to be innovating faster recently, nothing can match the pace of online retail, whose entire operating model has been completely overturned in about a half decade. Physical retail is being rethought and marketing is now primarily social media driven, two big changes. But what is next? Equity research analysts argue that voice orders through new devices like the Amazon echo will be key, as will better digesting customer data. More digitally-native brands will move into physical retail, which will be more about marketing and client experiences than it will about sales.

FINSUM: It will take some very astute investors to make money in retail at the moment as one has to have a sharp view about the development of the industry to pick winners (perhaps outside of buying Amazon or Walmart/Target).

(New York)

Barron’s has been getting increasingly bearish of late (with the Dow at 25,000 now, we can understand why!), and they have published a bearish article laying out the case for why a correction is looming. The argument has a lot to do with price action, and what the market is showing is that despite reaching a new high, it is coasting rather than gaining momentum. The last trading day of the year—a 118-point loss—was a worrying sign of slowing momentum, and many technical indicators now point to falling prices soon.

FINSUM: One key takeaway from this piece is that despite January being considered a good month for stocks, that is not the case in midterm election years.

(New York)

The stock market just finished a sensational year, capping what seems a one-in-a-lifetime nine-year run. However, there is something very surprising about this rally that is different than those in the past—more and more Americans are sitting it out because of fear. Since the start of 2012, nearly a trillion Dollars has been pulled from retail equity mutual funds (some went back in as ETFs). The market rose 116% over the same period. In the last three years, US stock funds (ETFs included) have seen net outflows each year.

FINSUM: The Financial Crisis left deep scars for investors all across the country, and the traumatic effects of it can be seen in the data.