Why CRAABs could replace FAANGs in the future
For those of you in the know, the popular acronym of FAANGs stands for Facebook, Apple, Amazon, Netflix and Google. Up until the last quarter of 2018 these shares were considered by most people to be virtually unstoppable. This resulted in many investors investing too much money into these stocks which led to them becoming overpriced. Due to a series of bad news stock market announcements by these companies at the end of last year stock market sentiment has turned against them and their share prices have fallen quite a lot, especially Facebook’s which fell by 19% in one day alone on 26 July 2018 to $1.70. It’s share price has languished at the same low level for the last 6 months.
The problem has been that stockbrokers have driven up their forecasts of future profits growth for these companies too high which has led to over–valuations of these stocks. The legendary investor Jim Slater, in his book the Zulu Principle, compares large company shares and small companies shares to elephants and fleas. He once said that “elephants don’t gallop” whereas “fleas can jump many times their body height”. So very large companies like the FAANG stocks are the elephants of the investment world.
Human beings do by and large act like sheep. They follow the crowd. Also they tend to like buying shares which continue rising in value hence the belief in FAANGs. Unfortunately, history has shown time and time again that people continue investing when prices get too high and lose out when prices subsequently fall sharply.
Are FAANGs finished? I don’t think so. In particular, it is difficult to imagine how Google and Amazon would not continue to be unstoppable at least for the foreseeable future. All 5 stocks are of course technology or, in the case of Amazon, technologically led, companies.
The new acronym that has emerged is CRAAB which stands for cryptocurrency (or bitcoins), robotics, artificial intelligence, automation and biotech companies. These sectors could well replace FAANGs over the next 10 years.
The good news is you can invest in the CRAAB sectors and other futuristic sectors by investing in our sister company, Minerva Money Management’s fund, the CCM Intelligent Wealth Fund. Our fund is the only one in the UK which invests in 9 sectors of the future, which makes it unique. Those sectors are as follows:
- Internet of Things;
- 3D printing;
- Renewable energy;
- Bank payment systems;
So if you would like to invest in innovative and disruptive companies that are shaping our future, what are you waiting for? Contact us to find out how to invest in the CCM Intelligent Wealth Fund today. You know it makes sense.