Why are the American markets doing so well, whilst their Covid number look like they are continuing to get out of hand?
It’s basically down to the big 5; Facebook, Apple, Amazon, Microsoft & Google – FAAMG.
These 5 stocks alone are so large that their values make up a whopping 42% of the NDX (Nasdaq top 100 Index). This index has actually risen 19% YTD to 22nd July 2020, with these 5 firms making up 55% of that increase between them.
With every business now moving faster towards online tech, investors should be ever more vigilant about the volatility of these 5 firms, who seem to be holding the rest of the market up.
However, these growth figures can potentially lead people to underestimate the risks inherent in these businesses, including; cyclical exposure, potential regulations regarding online activity or antitrust concerns or disruption risk as they encroach into each other’s businesses.