The hype to invest in high-cap tech companies is deafening. In this episode, we share what you need to know before buying FANG company stocks. Although FANG is the popular term, our analysis includes Facebook, Apple, Amazon, Alphabet, Tesla, and Microsoft — so it’s closer to the less slick-sounding FAAATM. Before we dive into that, we talk about the show’s books of the week and how ETFs and mutual funds have been performing compared to July of 2019. We then set the scene for how FANG businesses fit into the market-place and how we measure their success by their size and relative price. As these are the companies that are changing the fabric of society, we discuss how it is fitting that companies like Apple represent a whopping 6% of the US market. To put this in historical context, we explore AT&T’s past and how market-share tends to reflect the level of innovation introduced by businesses. The upshot of this is that the huge market-share that FANG companies have carved out is not as new of a phenomenon as it may seem. We then unpack how stock prices are valued and the impact that expectation has on stock valuation and returns. After talking about why we might be overpaying for growth stocks, we commiserate over the pain of being a value-titled index investor at times when large-cap growth stocks dominate both the discussion and the marketplace. We round this section by touching on the US stocks’ performance compared to US treasury bills, whether you should be looking for the next Amazon, and why you need to quantitatively look at a company’s business quality. From FANG we jump into our planning topic of the week — a review of the withdrawal rules for the Registered Education Savings Plan (RESP). Near the end of the episode, we share some bad financial advice for the week courtesy of TMZ and the idea that you should start your portfolio with 100% gold. Tune in to hear more from the world of rational investing.
Books From Today’s Episode:
What it Takes: Lessons in the Pursuit of Excellence — [ Ссылка ]
Bloomberg by Bloomberg — [ Ссылка ]
Success and Luck: Good Fortune and the Myth of Meritocracy — [ Ссылка ]
The Golden Constant: The English and American Experience, 1560 - 1976 — [ Ссылка ]
Links From Today’s Episode:
Rational Reminder on iTunes — [ Ссылка ].
Rational Reminder Website - [ Ссылка ]
Episode 100: Prof. Kenneth French: Expect the Unexpected — [ Ссылка ]
‘Persuasive evidence of market inefficiency’ by Barr, Rosenstein, and Lanstein — [ Ссылка ]
‘The Cross-Section of Expected Stock Returns’ by Fama and French — [ Ссылка ]
‘Identifying Expectation Errors in Value/Glamour Strategies: A Fundamental Analysis Approach’ by Piotroski and So.
— [ Ссылка ]
‘Do Global Stocks Outperform US Treasury Bills?’ by Bessembinder et al. — [ Ссылка ]
‘ Wolf of Wall Street Get Schooled in Day Trading Flip Stocks, Make a Bundle w/ Ease!!!’ — [ Ссылка ]
‘Why not start with 100% gold in your portfolio?’ — [ Ссылка ]
Episode 111: Gold, Insuring your Insurance, and Bank Sales Pitches — [ Ссылка ]
The Rational Reminder is presented as an educational resource and should not be construed as individualized investment advice, nor as a recommendation to buy or sell specific securities. The funds and portfolios discussed are examples only and may not be appropriate for your individual circumstances.
