Representing the top five technology companies in the US, the FAANG stock family always knows how to draw attention, no matter what.
In Wall Street jargon, FAANG is a big win and you can be one of the lucky investors to win big. FAANG stands for Facebook, Amazon, Apple, Netflix, Google (representing Alphabet, the parent company); these five technology shares are so popular that the media has developed an acronym for them.
Jim Cramer, co-founder of TheStreet.com and the host of Mad Money’s program on CNBC, was the inventor of the acronym FAANG.
These five shares know how to focus attention all the time. If you follow the financial news, you may find that FAANG shares often attract attention.
Why are these shares so important?
Because the performance of these five companies affects not only themselves, but also the sector in which they are involved, and the lives of all of us.
Take Amazon, for example. (By the way; when Jim Cramer used the term for the first time, the original A of the FAANG acronym was Amazon, Apple was added later.) Thanks to Amazon, shopping was quick, easy and accessible; so Amazon has crushed all its competitors and continues to change the rules of retailing. Amazon customers can buy everything from clothing to groceries, from the technological tool to the custom-made Game of Thrones music box, at the click of a mouse and without shipping.
That is why the expectations of Amazon investors are high. About five years ago, the price of Amazon shares was around $ 300; today it is watching around 1626 dollars. The company has a value of $ 795 billion and is the next biggest name in the S&P 500 index after Apple and Microsoft. (S&P 500 consists of stocks of the top 500 companies operating in the US.)
Even Netflix, the youngest of the FAANG quintet, is one of the heaviest balls in the overall market. The company, which has a value of approximately 150 billion dollars, constitutes 0.55% of S&P 500 alone. In addition, Netflix shares have risen from $ 40 to $ 339 in the last five years.
The total value of the five companies is 13% of the index, which includes 500 companies. If the FAANG quintet were a country and accepted market values as their GDP, they could be the fourth largest economy in the world.
In other words, should we invest in FAANG Shares?
Although the fact that FAANG shares have been successful in the past gives people confidence, it is controversial whether these five will maintain their individual growth rates. Moreover, when things are not going well, for example, quarterly reports such as the increase in the number of users decreasing or some revenue opportunities have been missed, the shares of these companies may drop suddenly.
Of course there is the price size of the job. The total cost of buying one unit of shares in each of the FAANG quintets is now $ 3,400. This account does not include exorbitant commission fees for overseas share purchase transactions. You should also remember that; Buying shares in the five largest US technology companies and diversifying the portfolio is not considered.
But you’re lucky that there are easier ways to buy shares from the FAANG quintet and include them in your portfolio. Perhaps you are using these methods.
Some mutual funds are investing directly in technology companies, including FAANG shares, which you can see here. Many foreign equity funds even invest in dozens of different companies, including the FAANG quintet. If you are investing in foreign equity funds, check the portfolio of the funds you are investing in, it is very possible to see the FAANG quintet.
In this way, you have a diversified portfolio and hold the shares of the most popular companies in the finance world; this is an investment strategy that will have huge returns in the long run.