We have written a lot recently about trading cryptocurrencies. Still, it turns out that when the crypto markets lack any trading volume to create big price swings, the more traditional instruments – stocks – are also very attractive. See Why FAANG Are Day Traders’ Favorites.
“FAANG“ Stock Drop: $1 Trillion Lost in Two Months
There’s plenty of room for reactive trading. Many of you are direct users of these companies’ services. You hear about them in the news and have your own opinion about the new products, strategies, or the last public affairs crisis they came through. It’s all in the news.
As with other assets, the big advantage of day trading is easily taking short or long positions. You don’t have to act as Warren Buffett, and only look for the companies you believe in long-term. You don’t have to wait for the right moment to enter a market. You can do it at the highest price at the bubble’s peak.
Earlier this week, the “FAANG” stock dropped heavily. The name refers to Facebook, Apple, Amazon, Netflix, and Google. The five stocks lost more than $1 trillion since the recent highs. The tech giants lost much of their value in October, and November has proved even more volatile. Since August 17, Facebook has lost 23%, Amazon 20%, Netflix 18%, Apple 16.5%, and Alphabet 16%. All the FAANGs underperformed compared to S&P 500 and Nasdaq Composite, which lost 11.5% and 7% in that period.
Fundamental Investors Bet on FAANG Stocks Despite Rising Volatility
Will they bounce back? It’s difficult to say since each company has problems and possible solutions. Each of them is disrupting markets, causing the anger of some social groups, and some, like Facebook and Google, are directly involved in politics. Large fundamental investors buying this kind of stock are looking far ahead into the future. All this should bring a lot of daily volatility. Probably the chaos will continue giving margin traders endless opportunities to profit.
Some analysts point out that the stable growth that took place in the first 3Q of 2018 was, in fact, an anomaly. Dan Wiener, the cofounder of Adviser Investments, said, “This market has just gone back to normal. We’ve gotten used to an abnormally calm market, with low volatility, but that’s just not reality”, and added, “We were spoiled”.
