FAANG basically refers to the stocks of five prominent American technology companies.
This term was popularised by Jim Carmer, who happens to be the television host of CNBC’s Mad Money in 2013.
He actually praised these companies for being “totally dominant” in their markets.
Initially, it was only FANG, but the other A was added in 2017.
Five Stocks of FAANG:
The five main stocks of FAANG need no introduction.
The five main stocks of FAANG Stocks are as follows:
- These five stocks are all familiar brands whose products and services will permeate our daily lives.
- These stocks are also American success stories, where each share has experienced its own triple-digit growth since 2015.
1. Facebook (FB):
- It is a social media maestro and is also the owner of Instagram, WhatsApp, and its own namesake website.
- It has given returns of more than 41% from October 28, 2019, to October 28, 2020.
- Since October 28, 2015, the company has returned more than 162%.
2. Apple (AAPL):
- It is the sole manufacturer in the group and has given returns of more than 82% from October 28, 2019, to October 28, 2020.
- Since October 28, 2015, the company has returned more than 272%.
3. Amazon (AMZN):
- The company is the world’s largest e-store and has provided more than 79% of the returns from October 28, 2019, to October 28, 2020.
- Since October 28, 2015, the company has returned more than 405%.
4. Netflix (NFLX):
- The company is a powerhouse in streaming and has provided more than 72% returns from October 28, 2019, to October 28, 2020.
- Since October 28, 2015, the company has returned more than 348%.
- It has a parent company whose name is Alphabet.
- This name is very much synonymous with internet searches and services.
- The shares have given more than 20% returns from October 28, 2019, to October 28, 2020.
- Since October 28, 2015, the company has returned more than 113%.
Significance of the FAANG stocks:
- For all investors, the technology sector has become increasingly important as there are many high-technology companies that have recently gone public through initial public offerings (IPOs) or SPACs.
- Technology stocks are also on the go-to list if you wish to experience some sort of capital appreciation.
- The FAANG stocks are comprised of highly mature companies, but they still seem to have good growth capacity.
- They are currently dominating the NASDAQ Composite Index.
- They also account for roughly 15% of the S& P 500 index, which serves as a proxy for the entire stock market.
How to invest in the FAANG stocks?
There are several ways through which you can invest in FAANG stocks, and they are as follows:
- The FAANG stocks all trade individually on NASDAQ.
- You can simply buy all five stocks and make your own FAANG portfolio.
- Here, you will have to keep in mind that all five of these stocks are pretty expensive.
- Not a single mutual fund or exchange-traded fund (ETF) is simply devoted to the FAANG group.
- Rather, all the technology funds are bound to include them.
- All these five FAANG stocks will be weighted heavily in many broad-based market index funds such as the First Trust Dow Jones Internet Fund (FDN) or the other one that tracks the NASDAQ Composite Index (IXIC).
The FAANG gang is now viewed as a modern-day blue-chip stock and not just a tech company. All the FAANG stocks, namely, Facebook, Apple, Amazon, Netflix, and Google are the firms where retail investors now interact in their daily lives.
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