Everybody loves the FANG stocks: Facebook, both Apple and Amazon for the A, Netflix, and Google (now Alphabet). That may not last. From Tyler Durden at zerohedge.com:
We highlighted the launch of the ICE FANG futures contract earlier this week (here) and what an auspicious moment it was for the launch.
The argument put forward by our guest author, Kevin Muir via The Macro Tourist blog, was that it is possible to be “bearish on the FANG stocks, but not be some perma-bear who thinks the world is about to collapse”. As Muir explained.
The reality of today’s limited alpha market is that when an investing theme gets some legs, it often becomes overdone and prone to disappointment. I have written about how, all too often, this results in a series of rolling mini-bubbles. There is nothing wrong with observing that the new era tech stocks are stupidly overbought, and that the risks are to the downside in the coming months. You can be bearish on FANG without thinking all stocks are going to zero…This new FANG contract offers some great opportunities to short the speculative names that have been the source of such over-exuberance, while maybe hedging it with a long position in the S&P 500 futures contract.
Muir commented wryly that now he would be able to get in as much trouble as high-profile bear, David Eeinhorn of Greenlight Capital by buying “old economy stocks and shorting the new tech darlings.” Another investor, with more than one gray hair of experience, has penned a thoughtful bearish piece on the FANGs in recent days, this time Neil Dwayne of Allianz Global Investors. Dwane’s piece is titled “De-FANGed: 5 Ways the Disrupters Could be Disrupted.” Dwane begins by noting that while consumers love the services they provide, the regulators are taking an increasingly close look at their anti-competitive practices.
To continue reading: De-FANGed: Five Ways The Disrupters Could Be Disrupted
