April 26, 2018
By Peter Bower
The FANG stocks; Facebook, Amazon, Netflix, and Google, are finally falling back to earth. These companies, along with a similar group of others, have had terrific growth. Unfortunately, this success has led to incredible popularity, broad ownership, and overvaluation. For a time, investors seemed to ignore valuation metrics, just focusing on growth. Inevitably, this momentum had to stall. Now value matters and these stocks are too high.
A shift from leadership by a concentrated group of growth stocks is underway. With a potentially accelerating economy, other companies offer opportunity. They are much cheaper, have improving prospects and may be much better investments. It is not unusual for markets to have shifts in emphasis and this is now taking place in our stock market. It is usually a messy process with many investors not grasping what is taking place. We do and are prepared for it; stay steady, my friends.
The Lonely Bull
