When I started these updates on February 26, 2020, about two weeks after the markets went into free fall, my first six posts were titled "Viral Market Meltdowns", reflecting the sell off across the globe. About half way through this series, I changed the title, replacing the word "meltdown" with "update", as markets turned around. In fact, by August 14, the date of this update, US equities had recouped all of their crisis losses, and were trading higher than they were on February 14, the start of the crisis. In that six-month period, though, there has been a reallocation of value, from old to young, value to growth and manufacturing to technology companies, and I have tried to both chronicle and explain these shifts in earlier posts. In this one, I plan to focus on a subset of these companies, the FANG (Facebook, Amazon, Netflix and Google) stocks, younger companies that have soared in value over the last decade, and two other tech companies of longer standing, Apple and Microsoft. These FANGAM stocks, which have dominated the market for the last decade, have become even more dominant during the crisis, and explaining (or trying to explain) that phenomenon is key to understanding both the market comeback and to assessing whether it is sustainable.
My crisis clock started on February 14, 2020, and it is now six months since its start, and as with my previous updates, I will begin with a quick overview of financial market action over (Read more...)