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  • My Gut Feeling For Today, September 27, 2018: De-FANGed

My Gut Feeling For Today, September 27, 2018: De-FANGed

September 26, 2018 / scott / Growth Stocks / No Comments

The so-called FANG stocks – Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Google (now Alphabet) (GOOGL) – as penned by my colleague Jim Cramer have been the source of much hype and profits for investors the past two to three years. Some people include Apple (AAPL) in that acronym and others do not. I exclude it because the first four are primarily internet-based companies whereas AAPL is not.

I whittled down and then out of our FB positions in 2017 and early 2018. FB as a growth company is now broken. AMZN I sold down in 2017 with the last bit gone by August 2017; in retrospect I should have held on, but we made plenty of money in the company’s stock and have no regrets. I recently decided to slough off about 30% of  GOOGL; as I am concerned that Alphabet may suffer the same consequences as did FB, as increasingly calls for the company’s breakup or regulation are growing louder.

NFLX on the other hand still has growth prospects in its future and does not have suffer from similar problems as does FB and GOOGL. Proof of that is how much other entertainment companies are willing to pay for content and distribution. Just look at the battle going on with Walt Disney (DIS), Comcast (CMCSA) and Twenty-First Century Fox (FOXA). In fact, I added to positions in NFLX this year.

Growth investing can be a rewarding strategy, but you cannot be dogmatic about individual growth stocks. Old growth stocks are replaceable by new ones. Growth can slow down and the price one pays for growth can get overvalued. When a growth stock hits a valuation brick wall, things can get nasty.  Remember the old America Online (after Time Warner was stupid enough to merge with it) or Blackberry who did not see the iPhone coming? Hence, you must be diligent and disciplined in your approach to growth investing. That means cutting back or completely selling some stocks. Don’t fall in love with a company because you will likely be heartbroken in the end.

As promised, I trimmed a little bit of AAPL.

The 3rd quarter is ending and many investors such as me would prefer that it would not end. However, as I have written, there are high hopes for the next two quarters.

The FOMC raised the Fed Funds target rate by 25 basis points for the third time this year. It was expected with almost 100% certainty. That announcement was followed by the typical post FOMC statement release roller coaster.

The next time you read me I will be back west in Henderson, NV.

 

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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL, GOOGL & NFLX although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage, and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
– You can email Scott at scott.rothbort.lakeview@gmail.com

© 2018 LakeView Asset Management, LLC. All rights reserved.

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