What Are FAANG Stocks?

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Though the names of a few of these big five have changed, the FAANG stocks chart remains the center of attraction for investors. This is due to their trustworthy positions, the existence of their monopoly, and the excellent reputation that these companies hold in the market.

Key Takeaways

FAANG Stocks Explained

With time, however, the players of the FAANG stocks kept changing names, and the initials lost significance. With Google becoming Alphabet and Facebook being renamed Meta, FAANG lost its G and F in 2015 and 2021, respectively. While the major tech investors were searching for a new acronym for FAANG stocks, a considerable drop in the market capitalizationMarket CapitalizationMarket capitalization is the market value of a company’s outstanding shares. It is computed as the product of the total number of outstanding shares and the price of each share.read more of Netflix, accounting for $130 billion, affected the FAANG stocks price.

These stocks take up a massive chunk of the market cap in the exchanges, so movement in such stocks affects the whole index. Moreover, one can well understand the handful of stocks and check if they hold good market strength and are good enough to make or shake the indices. In addition, they affect their shareholders and the entire shareholder strength.

List of FAANG Stocks

Let us understand the FAANG stocks meaning and work through the FAANG-turned-MAMAA list below:

How To Invest?

Since they hold a significant share in total stock prices, investors must invest a good amount to purchase the FAANG ETFs or stocks. They are part of the best investments for investors since, over time, they have evolved very well and paid good returns. However, investing in this portfolio alone seems risky.

Investing in FAANG stocks is always recommended, given the high influence, they have in the market. However, there are a few factors to consider before investors decide on investing in the assets:

Diversifying Portfolio

They must consider diversifying portfolios. If the investor deals with individual stocks, it becomes a primary reason for them to hedge the risks related to these stocks. For example, the FAANGs can give quite good returns for a while, but the markets are volatile and risky. Thus, diversification helps investors maintain a balanced profile.

Tracking Market Performance

Investors must keep studying the market to track its performance. They should not be under the notion that these stocks will always be paying well. A good investor is a well-informed research analystResearch AnalystResearch analyst is a profession where the main task includes research on specific fields, analyzing the facts and figures, interpreting the analysis, and finally presenting the same to a structured audience that can relate to marketing, finance, operations.read more, and they expect good returns only after tracking the movement of stocks and the market regularly.

Most major investment firms and mutual fundsMutual FundsA mutual fund is a professionally managed investment product in which a pool of money from a group of investors is invested across assets such as equities, bonds, etcread more companies combine these stocks and other smaller ones, which helps investors diversify their portfolio. However, if the investment does not give expected returns in the future, investors tend to lose a huge amount in the name of those stocks.

This article has been a guide to what are FAANG Stocks. Here we explain their story, mention the list of those stocks, and discuss how to invest in them. You may learn more about investments and trading from the following articles –

Though MAMAA is the new normal, investors can still choose to invest in FAANG stocks, given their powerful presence and stable performance in the market. When people invest in these stocks, the returns are lucrative and expected to outperform the markets around them. However, the risk associated is equally high as there have been times when these stocks have been found performing insignificantly. Still, investing in these stocks could be given serious thought.

Recently, it has been observed that FAANG stocks have witnessed a drop in their prices. Starting from Apple, the largest tech giant observed a 20% fall with Alphabet and Meta stocks, plunging to 36% and 66%, respectively. These stocks have not been seen in a good position for quite some time now. The reasons behind the price drop are inflation and the increased cost of borrowing. Plus, FAANGs highly depend on advertising for revenues, and the advertising revenue has witnessed a significant fall, affecting their stocks’ performance.

Recently, it can be said that these stocks are overvalued, given the falling prices of the stocks and the drop in the level of performance of the players as well. Investors’ continuous dependency on these financial instruments leads to their overvaluation.

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