Its festive time, especially Diwali, and a good time to sit back, take a deep breath and indulge in a review of events affecting your portfolio. The current festival period is definitely sweeter than the previous one as the broader markets have performed much better than the previous year. The year 2020 can be termed as a ‘black swan’ year with the pandemic hitting us from the blue. Fortunately, the graph of the number of cases shows that recovery has been more than impressive in the past few days.
In response, the markets have turned positive, sending out a signal of hope to investors. However, the rally in 2020 has been restricted to high-growth stocks. And if we take into account the mother of all markets i.e. those of the US, it was the FAANG (Facebook, Amazon, Apple, Netflix and Google) stocks that dominated the market moves. Amazon delivered more than 64 per cent returns while Netflix was up by more than 47 per cent on YTD basis with Facebook and Alphabet (Google) inching up by 28 per cent and 21 per cent, respectively, on YTD basis.
One may argue that there are several stocks which have inched up more than these FAANG stocks. A point to note here is that the FAANG stocks plus Microsoft comprise approximately 25 per cent of the market capitalisation of the S & P 500 and accounted for almost all the market gains on YTD basis for S & P 500. Without the contribution of these FAANG stocks the S & P 500 would be trading in the negative zone. It is because of this huge influence exerted by the FAANG stocks that they were the talk of the town in 2020.
This story is from the November 09, 2020 edition of Dalal Street Investment Journal.
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This story is from the November 09, 2020 edition of Dalal Street Investment Journal.
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