History Says FANG Feast Is Finished

Friday, November 23, 2018
By Paul Martin

Via Dana Lyons’ Tumblr,
Fri, 11/23/2018

A comparison to the dotcom bubble suggests the FANG stocks may have topped.

3 years ago, on the day before Thanksgiving, we published a blog piece that remains one of our most popular posts ever. Its subject was the FANG stocks, i.e., Facebook, Amazon, Netflix and Google (Alphabet). At the time, FANG was all the rage, much more so than even today if you can believe it. A composite of the 4 stocks had just achieved a 500% rally in just 3 years. Our post suggested, based on one historical analog, that it was possible the FANG run may actually have further to go — much further.

That suggestion was based on a comparison to another group of former high-flyers that we introduced in the post. Looking to the dotcom bubble, we created another composite, this one of 4 of the leading stocks during the dotcom era: Cisco, Intel, Microsoft and Qualcomm. We labeled this group CIMQ (not as catchy, I know).

We compared the FANG’s 3-year progress vs. the 3-year CIMQ progress from 1995-1998. Our point was that, despite the out-sized FANG gain, the group may have further upside, as the CIMQ group did into the 2000 top. At the time, very few, if any, investors would have believed it was possible for FANG to follow up on their recent 500% gain with an additional 400% appreciation like the dotcom era CIMQ stocks — or much more appreciation period.

The Rest…HERE

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