Mar 27, 2020
This week, I’m talking about the FAANG stocks - these are the five most popular powerhouse American tech companies - Facebook, Amazon, Apple, Netflix and Google.
Today, I’m talking about whether or not FAANG stocks are worth buying now. An equal investment in each of the FAANG stocks would have resulted in an average return of 1,433% during the 2010s. So is it too late to get in and buy one or several of the FAANG stocks?
One of the worst things you can do as an investor is to buy in to something when it’s overpriced. It's a common temptation to let the fear of missing out drive you into a bad decision, and buy in after all the value in something is already baked in and most of the upside has already passed.
But it actually doesn’t matter that the FAANG stocks are up 1,433% over the last decade. What matters is not past returns or the current price of the stock. What matters is the value. Is the stock price justified based on the company’s earnings? And future growth prospects...is the stock price justified based on the company’s business model, their competitive advantages, market dominance, and so on.
So whether or not you should buy then, depends on an objective assessment of current value and future growth prospects, along with several other qualities that I’ll cover in tomorrow’s tip.
The bottom line is: Don’t make a decision about where you go from here, by looking in the rearview mirror. You must look forward through the windshield.
That’s it for today. Thanks for listening. Tomorrow, I’m going to talk about the additional qualities to look for in FAANG stocks (or any investment for that matter), regardless of whether or not it’s a FAANG stock.
My name is Ashley Micciche and this is the One Minute Retirement Tip.
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