Starting Out 2020 with a FANG
Dear Penny Stock Millionaire,
Finance news can be so boring and predictable, focusing on blue-chips or the latest news on FANG stocks.
For years I’ve focused on penny stocks. This unique niche offers the best trading opportunities for me. And it’s allowed some of my students to exponentially grow their accounts.
But for some reason, mainstream media chooses to focus on stocks that are far less volatile and much harder to predict. It’s such a limited way to look at the markets.
I wish they’d open their eyes and see the vast opportunities penny stocks can offer. But instead of forcing people to change their mindset, I’ll take a deep dive into FANG stocks. And maybe I open your eyes and show you there are better ways to invest your hard-earned money.
What Are FANG Stocks?
Once the economy recovered from the Great Recession, there were new market leaders. Technology companies rose from the chaos and helped propel the economy forward.
These companies began to amass a large following because of their above-average returns. To help viewers follow these emerging technology companies, my ‘favorite’ (note the sarcasm) financial anchor Jim Cramer coined the term FANG.
FANG is an acronym for the best performing tech stocks, which include Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Netflix (NASDAQ: NFLX), and Google (NASDAQ: GOOG).
Later on, FANG became FAANG to include Apple. So you may see some references to FAANG instead of just FANG. In most cases, this isn’t a huge deal.
But it’s fair to say Apple (NASDAQ: AAPL) has earned its place among the FANG family over the last decade.
Cramer created the group to help investors invest their money into companies that represent the future. To this day, all the members of the FANG group are dominant in their markets and continue to have serious momentum thanks to their continuous innovation.
Why Do FANG Stocks Matter?
Together, FANG stocks represent trillions of dollars in market capitalization. The vast size of these companies can dramatically impact the direction of the market. But just because they’re huge doesn’t necessarily mean they’re slow.
Unlike large companies of the past, these giants heavily invest in research and development, and that significantly spurs more explosive growth.
Rather than taking profits and paying executives fat bonuses, the FANG stocks are on a mission to change the world. Every one of these companies strives for innovation and growth, pushing boundaries and creating millions of jobs in the process.
Should You Invest in FANG Stocks?
FANG stocks can be risky. Since the companies rapidly grow, they’re often prone to more volatile movements than the more stable blue-chip stocks.
And as investors experienced at the end of 2018, FANG stocks aren’t immune to pullbacks.
I’ll be honest … for a moment, the pullback was scary. But the FANG stocks didn’t die off. Instead, they recovered well.
Personally, I’m a huge fan of FANG stocks. They’re disrupting old industries that failed to innovate. They’re making the world a more efficient place. Their technologies are unmatched. Together, the FANG group is changing the world, and I believe they’re just getting started.
So, you could argue that logically it makes a ton of sense to own FANG stocks. How many of us use their products every day?
I’m constantly on Facebook…
I frequently buy stuff on Amazon…
I love to catch up on my favorite Netflix shows…
And how do I get to any website? You guessed it … Google.
I can’t imagine my life without FANG companies. It seems crazy not to own any shares when you think about how often you use their products.
It may seem crazy, but there are plenty of reasons why trading doesn’t always work that way. If you need proof just look up Uber’s IPO and stock performance…
FANG Stock Performance
According to Morningstar, the FANG group returned nearly 700% in profits for investors between June 2013 and August 2018.
I know… I said FANG stocks aren’t all they’re cracked up to be. But when you compare them to the overall market, it’s not a close competition.
In a five-year period, FANG stocks returned 700%. The average one-year return of the S&P 500 is around 8%.
From this perspective, FANG stocks seem like an absolute goldmine. But, there are penny stocks that move over 300% in one day. Wall Street loves to hate on this niche. But I have learned how to capitalize on these volatile low-priced stocks.
The Bottom Line
If you’re interested in only investing in FANG stocks, the easiest approach is to buy the individual stocks in your brokerage or retirement account.
There’s not a single ETF that carries exposure to only FANG stocks. The point of an ETF is to help investors diversify their portfolios. Having an ETF with only four stocks defeats the purpose of diversification.
The closest ETF for FANG only stocks is the AdvisorShares New Tech and Media ETF (NYBOT: FNG). It’s important to note this ETF still has 25 stocks in its bundle, but they’re all closely related to the FANG companies.
Mind you before you invest in anything make sure you do your research and study.
Tomorrow I’ll go deeper into various ways you can trade FANG stock, believe me. You won’t want to miss it.
Editor, Penny Stock Millionaires