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These 4 Simple Trades Dominate the Market

Tuesday, March 7, 2017 9:26
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This post These 4 Simple Trades Dominate the Market appeared first on Daily Reckoning.

Not even Donald J. Trump can stop tech’s four horsemen.

Back in November, the tech sector was ready to close up shop. The Trump Bump lifted materials and industrial stocks from the rubble. But the many of the mega-cap tech leaders – including the famous FANGs: Facebook, Amazon, Netflix, Google – were left behind.

The financial media worked overtime to conjure up some plausible excuses. Maybe Trump’s policies on overseas trading spooked investors. Heck, maybe buyers were afraid of retaliation aimed at tech companies for not supporting him during the campaign. After all, Silicon Valley did go all-in for Clinton.

Or maybe these stocks had simply worn out their welcome. By early December, the FANGs had dropped a collective 5% since the election. You would have thought Trump had collected everyone’s smartphone, banned the internet, and forced us all to go back to leaving our homes to engage in impulse shopping.

Whatever the reason, the phenomenon of the lagging FANGs has completely fizzled.

Fast forward to 2017, and you’ll notice that big tech isn’t dead after all. In fact, these stocks are back to their old tricks.

Facebook (NASDAQ:FB) is up almost 20% year-to-date. Amazon (NASDAQ:AMZN) shares have risen 13%. Netflix (NASDAQ:NFLX) has jumped almost 15%. And Google (Alphabet) (NASDAQ:GOOGL) is up 7%. Their stellar performance so far this year is the reason the Nasdaq Composite is up almost 9% in 2017. For comparison, the S&P 500 has clocked a 6% gain so far this year…

These mega-cap tech darlings are taking turns slaughtering the market even on days when most stocks are in the red.

Just yesterday, Netflix stock caught a timely upgrade from UBS. After tacking on more than 7 million new subscribers during the fourth quarter, Wall Street’s best and brightest now expect the streaming giant to pull in 5.3 million new subscribers during the first quarter. The company doesn’t have as many new original releases coming out right now—yet it continues to exceed growth expectations and build its international customer base.

“Netflix is certainly well-liked and not inexpensive, but we do see the potential for Netflix to exceed Wall Street subscriber growth expectations and believe that concerns regarding competition and content costs are misplaced,” UBS explains.

Each of the FANGs owns an important tech niche. Google owns search. Netflix owns streaming. If Amazon continues developing Alexa at the current rate, we’ve predicted that the company will own voice (on top of its e-commerce dominance). And I don’t think I need to tell you about Facebook’s dominance of social media. While Snapchat is just now coming on the market, Twitter shares are sinking closer to all-time lows every day.

FANG might be a silly stock market catch phrase. But these companies are the real deal. Don’t make the mistake of betting against them this year…

You’re no stranger to booking consistent, double-digit gains courtesy of the FANG crew. In fact, our model trading portfolio currently sports more than its fair share of FAN money (we don’t have a Google position right now).

You had a shot to book 20% gains on a quick Netflix trade in just two weeks back in October. We’re hanging onto the other half and open gains of 40%.

Our Amazon trade is up almost 10% since we re-entered the stock in January (we took gains of 25% on a previous Amazon trade back in November). And even when factoring in its late 2016 swoon, your Facebook trade is showing open gains of 14%. I don’t care what the broad market’s doing – we can’t complain about gains like these!


Greg Guenthner
for The Daily Reckoning

The post These 4 Simple Trades Dominate the Market appeared first on Daily Reckoning.

This story originally appeared in the Daily Reckoning . The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.


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