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When looking back at the artificial, central-bank created "bull market" which started in March 2009 just as the Fed announced its expanded QE1 and continued as central banks purchased over $15 trillion in assets, one remarkable stat stands out: of the 401% total return in the S&P500 from the "Haines Bottom", just 10 stocks have account for almost 25% of the return. Narrowing down the scope, of these 10 companies, 2 FAANG names - Apple and Amazon - were responsible for the bulk of the gains, accounting for roughly 30% of the group's advance.
That's hardly a surprise: in fact, readers will recall that at the end of June 30, just 4 stocks - Amazon, Microsoft, Apple and Netflix - accounted for 84$ of the S&P's upside through July.
Today - Rotation - Tech - Nasdaq - %
And while today's latest rotation into tech has helped send the Nasdaq surging 1.7% as hedge funds once again scramble for a barbell trade, buying both bond safe havens and growth stocks, at least one commentator thinks that the time of the FAANGs is over. In a note published overnight by Bloomberg commentator Ye Xie, he writes that tech companies, epitomized by the FAANGs, have defined the bull market over the past decade. However, he cautions that the FAANGs best days may be behind us, "as their ability to squeeze profitability reaches a limit."
He explains why below:
Bull - Market - Decade - Technology - Sector
Since the bull market started a decade ago, the information- technology sector has risen 512%, compared with 305% for the S&P 500. Only the consumer discretionary sector, of which Amazon accounts for 30%, performed better, with a gain of 578%. In FAANG stocks, Facebook, Netflix and Alphabet were moved to the communications sector in the S&P and MSCI industry classifications last year. Apple remains in tech, and FAANG stocks are still largely referred to as tech companies.
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