The superstar FANG stocks — Facebook, Amazon, Netflix and Alphabet's Google — still grab a lot of headlines, but investors might be better served ignoring them and focusing on more boring sectors of the market, such as autos, tech hardware and semiconductors.
Olivia Engel, senior managing director and CIO of active quantitative equity at State Street Global Advisors, says that based on the firm's proprietary multi-factor model FANG stocks are still expensive and risky compared with many other sectors and stocks.
And don't bother expanding the universe of superstar tech stocks to include Microsoft, Apple, Nvidia, Twitter and Tesla — or their emerging-market equivalents the BATs: Baidu, Alibaba and Tencent — because Engel says that group, on average, continues to be expensive, high risk and of lower quality compared with the rest of the equity universe.
So rather than focusing on the FANGs and BATs that are attracting all the attention – consider the boring ones. As mathematician and physicist Freeman Dyson once said, “Nothing is boring if you look at it carefully.”
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