FAANG Stocks are Adding Risk

Risk-smart investors should avoid concentrations. FAANG stocks have become large parts of many portfolios. Investors should seek to minimize their concentrations in these stocks. One method may be looking for alternatives to market capitalization weighting.


FAANG stocks, Facebook, Apple, Amazon, Netflix and Google have grown substantially. I’m not going to be so bold as to say that they are overvalued as I do not own a crystal ball. What I can say however is that they have become very large parts of most capitalization weighted indices. As investors there aren’t many things we can control. One thing we can do is avoid concentration. Market cap weighting portfolios generally works over time, however, this methodology by its very nature becomes concentrated in stocks and sectors and what commonly ends up being the wrong time. I advocate for the use of factors as an alternative to building diversified portfolios. If you are unsure of your portfolios concentration levels I’d be happy to take a look. Thanks for listening.

#Investing #Massadviser #Woodruff #WealthManagement #FactorInvesting #RiskSmart

Lake Oswego, Oregon 97034

2020 BY WEALTHFACTOR - All Rights Reserved 

*Important Disclosures and Disclaimers: No assurances can be made that WealthFactor will be able to achieve its investment objectives or avoid losses. WealthFactor is a Registered Investment Advisor. The information on this website is not intended as tax or legal advice. The information on this website is intended for residents of Oregon. This information is not intended to be personalized and as such should not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular investment strategy. WealthFactor is licensed with the State of Oregon and will seek proper licensing or exemption from licensing before conducting business in any state.  ADV Disclosure documents available upon request.  Click here for additional disclosures.  Click here for definitions.