Forget FAANGs. It’s stock picker market now

Latest results from Tesla (TSLA) And Netflix (NFLX) Show how ridiculous it is for investors to buy topics and memes like FAANGs or MTs. FAANG, if you want to add Microsoft (MSFT) and Tesla to Facebook (FB) (dead) /Amazon (AMZN)/apple (AAPL)/ netflix /The Google (The Google) (Alphabet) Five.

This is a stock picker market.

“This environment will create an important backdrop for active investing,” Ken McAtamney, head of the global equities team at William Blair, said in a report.

“Understanding companies with differentiated business models, unique cultures, and enduring competitive advantages will be increasingly critical to determining investment performance in this complex environment,” he added, noting that “the dynamic shift of winners and losers from companies remains constant.”

One of the biggest mistakes an investor can make is assuming that all stocks in a particular sector must go up and down in tandem. This is an overly simplistic binary view of the world.

Instead, investors need to do their homework and find companies with strong business models and healthy fundamentals.

“Not all companies are created equal,” said Paul Moroz, chief investment officer at Maor Investment Management.

What emotion drives the stock? Check the Fear and Greed Index

Morrows said that finding companies that do not rely on discretionary consumption spending will become more important. He pointed out that companies such as insurance broker Marsh and McLennan (MMC) A UK-based cleaning supplies company Bunzel (BZLFY) are examples of “boring” companies that do well.
Even in the tech sector, Moroz said he loves it Microsoft (MSFT) Because of the fixed subscription revenue for many business software products.
Nasdaq’s big technology leaders are a broad and diverse group. That’s why investors shouldn’t assume that Netflix’s troubles are bad for the rest of the tech sector or that the good Tesla news gives traders a clear signal to buy every momentum stock on the horizon.

“The first-quarter results to date highlight our view that investors need to be selective,” Mark Hefele, chief investment officer at UBS Global Wealth Management, said in a report this week.

“Tesla’s record earnings confirm rising global demand for electric cars,” Haefele added, and also noted that “the disappointing result for Netflix should not obscure the strong outlook for subscription services.”

Netflix’s major failure could end up being a problem of the company’s own. It’s not necessarily a reason to avoid all the other FAANGs.

Of course, investors are still willing to flock to companies reporting strong results. Tesla’s success shows that traders are not afraid of expensive stocks that investment experts like Warren Buffett tend to avoid.

Yes, Tesla is expensive when you look at traditional P/E ratios and compare Tesla to the rest of the auto industry. But as long as Tesla lives up to the hype, that might not matter.

“Tesla’s ability to achieve a $1 trillion valuation … is confirmation that paying for potential future earnings remains a sensible investment with the right business model,” Louis Navilier, founder of Navellier & Associates, said in a report Thursday.

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