Tuesday, July 18, 2017

FANGS and the gang

FANG, the gang of 4 (including Amazon), are rocket stocks to me. In my books, I recommend trailing stops. From their fundamentals, they are too risky to me, a fundamentalist.

It is risky for SPY or similar ETFs that are market cap weighted.They may stay in this level for a long while.

When the market plunges, they would lead the pack. The institution investors may be switching from tech to health care. Not energy (as expected by many) until oil price reaches 70 or higher.

Evaluate the ETFs via P/E (also Shiller P/E). P/Sales, P/Book... for fundamentals. I use SMA-200%, SMA-50% and RSI(14) for basic technical.

I traded FANGS, made some profits and got out fast - I want a good sleep. I advised my friends to get out of internet stocks in Jan. 2000. Could not convince the lottery winners not buying lottery tickets.
Fundamentals may not show everything.

Amazon may be spending money to set up for the future. I believe they capture the entire self publishing market where I participate. From the empty malls, they have done a great job. However, there are some limits like selling furniture. Personally I prefer organic growth and I know many bankrupted companies when they could not pay back the loans.

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