And the FANGMAN shivered as Netflix got knocked down.
A reversal of roles took place in the stock market last week: The “Giant 5” combined – Apple, Microsoft, Amazon, Alphabet, and Facebook – had a lousy week. And the FANGMAN, which includes Netflix and Nvidia, shivered. But the rest of the market rose.
Over the week ended Friday July 17, the combined market capitalization of the Giant 5 fell by 3.5%, or by $234 billion, to $6.40 trillion. Friday a week earlier, the combined market capitalization of the Giant 5 had reached an all-time high of $6.64 trillion, having skyrocketed since their crisis-low on March 16 by 62%, or by $2.54 trillion (market cap data via YCharts)
Four of the “Giant 5” fell during those five trading days. Only Apple ticked up a smidgen. The list shows the percent change over the week and the market capitalization (number of shares outstanding times current share price) as of the close on Friday:
- Apple [AAPL]: +0.3% to $1.67 trillion
- Microsoft [MSFT]: -5.3% to $1.54 trillion
- Amazon [AMZN]: -7.7% to $1.48 trillion
- Alphabet [GOOG]: -1.9% to $1.03 trillion
- Facebook [FB]: -1.6% to $688 billion.
Alibaba [BABA] doesn’t make the list because it’s not a proper stock that conveys a slice of equity; it’s an ADR, issued by an offshore mailbox company that has a contract with Alibaba. Holders of BABA have no ownership of Alibaba, the Chinese company. They have ownership of a mailbox company that has a contract with Alibaba.
How did the rest of the market do without the Giant 5?
Even as the Giant 5 had a lousy week, the total market, as measured by the Wilshire 5000, which includes all 3,415 or so stocks listed in the US, rose 1.6% over those five trading days.
But my “Wilshire 5000 Minus Giant 5 Index” — the rest of those 3,415 stocks without the Giant 5 — rose 2.9%.
This was a big move, but it still left the “Wilshire 5000 Minus Giant 5” 2.4% below June 8, and 8.6% below its peak on February 20. In fact, it’s up only 2.2% from January 26 of 2018, having been on a two-and-a-half-year wild ride to nowhere, and underperforming even a despicable savings account over the period, while whacking investors with a huge amount of volatility (Wilshire 5000 data via YCharts):
Under the magnifying glass.
The chart below shows the percentage change of the “Giant 5 Index” (red line) since its pre-Covid peak on February 19, against the “Wilshire 5000 Minus Giant 5 Index” (green line).
On Friday July 17, the “Giant 5” was up +14.5% from February 19, while the “Wilshire 5000 Minus Giant 5” was down -8.6%. But note the reversal last week:
Since January 2017, as the shares of the Giant 5 have skyrocketed, the weight of the Giant 5 in the overall stock market has surged from 10% in January 2017 to 20.4% on Friday July 10 – just five stocks! But the decline of the Giant 5 over the past five days, and the increase of the rest of the market caused their weight to drop to 19.5% (Wilshire 5000 data via YCharts):
The FANGMAN shivered.
The FANGMAN are the Giant 5 plus Netflix [NFLX] and Nvidia [NVDA]. The two are not giants, like Apple is a giant. It would take nearly eight Netflixes (so to speak) to equate the market cap of Apple. But they’re large and they’re crazy, and they’re captured along with the Giant 5 by my FANGMAN index.
Among the FANGMAN, only Apple ticked up during the week (+0.3%). The other six components of the index fell, with Netflix plunging over 10%. This pushed the FANGMAN index down by 3.7% for the week, or by $266 billion. After having soared 184% since January 2017 and tasted the intoxicating sweetness of $7 trillion ($7.14 trillion on July 10 at the close), the index sank back to $6.87 trillion (market cap data via YCharts):
So what we saw this week was an reversal of the divergence – with the incredibly surging Giant 5 and the FANGMAN taking a hit, while the rest of the stock market combined rose fairly strongly but remains a dud, beaten by despicable savings accounts over the two-and-a-half years since January 2018.
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