Fred Hickey: "It might be that the growth possibilities for these FAANG stocks are over"

It might be that the growth possibilities for these FAANG stocks are over.  They're too high, the regulators have them in their sights, they might get broken up.  Google's growth doesn't come from search, it comes from YouTube.  Facebook's growth doesn't come from Facebook, it comes from WhatsApp and those kind of things.  And if they can't acquire, and you just have a platform that they have to acquire and grow, then the growth rate goes away, and people over time become less enamored with them.

~ Fred Hickey, "The End Game Ep. 12 - Fred Hickey," The Grant Williams Podcast, December 1, 2020

Bloomberg Businessweek: "Bashing Big Tech now looks as dated as a handshake" (2020)

In a crisis, large companies can have an edge.  As the pandemic has forced the shuttering of local stores and restaurants, grounded consumers streamed Tiger King on Netflix, stocked up on groceries and supplies from Amazon, and gathered together on Zoom.  Hardly and company is immune from the economic shutdown, but the big ones have more resources to weather the pandemic and, in some cases, may be able to gain market share.

On Wall Street, that's exacerbating a divergence between small and large companies which has been frustrating stockpickers for some time.  The Russell 2000, a benchmark for small companies, has lagged the big-name S&P 500 index badly over the past two years.  This year the small stocks, with a median market valuation of about $525 million, have lost 22% as of April 28; the S&P, about half of that.  The Nasdaq 100, which tracks the largest tech stocks, is down less than 1%.  The S&P 500's companies now make up 82% of the entire U.S. stock market's value, a share that's been steadily rising this century.

None of that is good news for active fund managers...

[I]t's easy to see the pandemic continuing to entrench some advantages of size.  Bashing Big Tech now looks as dated as a handshake, and Silicon Valley's giants may be able to expand their clout. Large companies can also find it easier to tap credit and solve supply chain problems.

~ Bloomberg Businessweek, "How Quants Got Bullied," May 4, 2020

Peter Lynch on the shortage and concentration of growth companies in the economy

There's a real shortage of growth companies.  That is a red flag, because all the money is flowing into [a few companies].  There's an end to that game.  It will scare me if this trend continues for a couple more years.

~ Peter Lynch, "Fidelity's Peter Lynch Speaks Out," Barron's, December 21, 2019

Barron's: DOJ goes after Big Tech even though "none of the companies have traditional monopoly positions"

The Justice Department announced late Tuesday that it has opened a review of “the practices of market-leading online platforms.” The agency didn’t name specific companies, but the wording suggests that it will look into Google parent Alphabet for search, Facebook for social media, and Amazon.com for e-commerce.

[...]

[P]roving consumer harm is a tough task when Facebook’s and Google’s services are mostly free, and Amazon’s e-commerce platform has arguably lowered prices and increased convenience through faster delivery.

In fact, none of the companies have traditional monopoly positions in various markets. EMarketer estimates that Amazon represented 37% of U.S. e-commerce sales in 2018 and 3.5% of total retail sales. The firm also said Google accounted for 50% of U.S. digital-ad spending that year, while Facebook had 22%. Apple’s iPhone had 45% of the U.S. smartphone market, according to eMarketer’s latest data.

~ Tae Kim, "Why Investors Shouldn’t Overreact to the DOJ’s Antitrust Review of Big Tech," Barron's, July 27, 2019

Marc Cohodes on what to avoid in selling short

I don't tackle anything that has momentum, unanalyzable, just because it's too high - like the FANG stocks, I could care less.  I could care less what Cramer's touting... I could care less about the IBD 100...  No interest.  And I'm also not interested in well managed, well run companies who invest in the future.  I've never been short Amazon once.  I've never been short Google, Facebook, Netflix, those guys.

~ Marc Cohodes, RealVision interview with Grant Williams, 45:45 mark