Jefferies: It’s Time to Move Past the FANG Bangers

Bad news for you Fang bangers out there, those long FB, AAPL, NFLX and GOOG: Jefferies sees breadth expanding and doesn’t see a reason to remain secluded in just 4 stinking stocks. They believe, unlike Morgan Stanley, stocks might just rally, beyond a handful of names.

Year-to-date, Facebook is up 35 percent, Amazon 116 percent, Netflix 157 percent, and Google’s Alphabet has jumped 43 percent. This means that the FANG group has been carrying the S&P 500 for much of the year, with the S&P 500 Equal Weight Index, which strips out the effect of large market capitalizations, in negative territory for the year.

A rather important question for investors looking ahead to 2016 is thus whether or not the run in all-powerful FANG stocks will continue. Analysts over at Jefferies are skeptical.

Chief Global Equity Strategist Sean Darby and his team figure there are three extra questions that can help explain the FANG group’s recent upwards moves and answer the question of whether or not the stunning run will continue into next year.
First, how much of this surge is simply due to investors avoiding other areas of the market?

“With the S&P likely to experience a negative earnings year in 2015, there has been a fund shift to ‘growth’ through the year, just as there has been a shift out of the U.S. into other markets,” Darby says. The returns in the S&P 500 since May might be partially explain by this point. As Dana Lyons, partner at J. Lyons Fund Management put it in a blog post late last week; “The median U.S. stock … hit its high for the year in May and is actually down nearly 7 percent [as of Nov. 25].” Since May, all of the FANG stocks are up at least 30 percent.

The research note went on to explain how inflation had bottomed and how chocolate covered rainbows are not only good for you, but tasty too.

I have no real input on this matter. One firm thinks stocks suck and will continue to suck. These maniacs think FANG is old hat and new hats are about to emerge. It’s all horseshit, if you ask me.

This is a traders market.