America’s Big 5

America’s Big 5

by Aurora Financial — Posted on July 22, 2020

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.