Photo by Kai Wenzel on Unsplash

Mega-Cap Tech Stocks Are As Good As It Gets These Days

And Form The Core Of My Current Stock Portfolio

(Investment opinions are my own. You should do your own due diligence prior to making any investment decisions. Full disclosure — I own shares in Google, Apple, Microsoft, and Amazon)

I highly recommend perusing these charts from Ed Yardeni which compare the stock and financial performance of the FANG companies (Facebook, Amazon, Netflix, Google) to the broader market. Pay particular attention to:

Figure 2 — FANG Stocks Vs. S&P 500

• Look at the growing gap between the red line (FANG’s earnings share) and the green line (FANG’s revenue share). Thanks to their earnings growing faster than the overall market’s as well as increasing profitability (a big driver is AWS), $1 out of every $20 of S&P 500 earnings now belongs to one of the FANG companies. If you swap out Netflix and bring in Microsoft and Apple, mega-cap tech’s earnings share gets even bigger.
• Since mid 2020, the blue line (FANG’s market cap share) has been dipping implying that the FANG stocks have underperformed the rest of the S&P 500 in terms of price over the past seven months or so. During the same time, both the red and green lines climbed, meaning that the FANG stocks continued to…