Are You Ready For The 'FANGMAN'? — What To Know About The New Acronym On The Block

Are You Ready For The 'FANGMAN'? — What To Know About The New Acronym On The Block

Photo by Daisy Anderson from Pexels

After the FANGs, FAANGs, and MAGAs, another acronym taking the investment world by storm is FANGMAN. This acronym is used by traders to refer to stocks of seven of the biggest tech companies in the world.

The combined market capitalization of these stocks is about $7.9 trillion, which is roughly 25% of the total market capitalization of S&P 500 companies. To put things in perspective, the combined market cap of these seven stocks is more than the GDP of Japan, Germany, or India, which are the third, fourth, and fifth largest economies of the world, respectively.

The Constituents

The stocks in the FANGMAN group are:

  • Facebook, Inc. Common Stock (FB).
  • Amazon.com, Inc. (AMZN).
  • Netflix Inc. (NFLX).
  • Alphabet Inc. Class A (GOOGL).
  • Microsoft Corporation (MSFT).
  • Apple Inc. (AAPL).
  • NVIDIA Corporation (NVDA).

Buoying S&P 500 Performance

2020 was a year marred by the COVID-19 pandemic which led to economic contraction worldwide due to disruptions to businesses and other activities. The stock market, given its forward-looking approach, weathered the setback and ended the year with gains.

For instance, the S&P 500 Index ended 2020 at a record high and in the process generated a return of 16.2% for the year. The FANGMAN stocks played a big role in that as they outperformed the broader gauge:

  • Facebook: 33%.
  • Amazon: 76.3%.
  • Netflix: 67.1%.
  • Alphabet: 30.9%.
  • Microsoft: 42.5%.
  • Apple: 82.3%.
  • Nvidia: 129.3%.

FANGMAN, A Predictor of Stock Market Moves? 

Given the outsized weighting in different indices, it is logical to view FANGMAN stocks as a good predictor of which way the broader market is headed.

FANGMAN Invariably Outperforms Market

For those investors who are looking for above-market returns, or "high-alpha" stocks, FANGMAN could be the better bet. These stocks outperform the broader market, thanks to their transformational business models, high growth, and financial might, among other things.

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