If value investors have been on the rack in recent times, their experience has stemmed, at least in part, from inadequate exposure to Faang stocks — the fabled Facebook, Amazon, Apple, Netflix and Google/Alphabet.
Since last Thursday’s spectacular $120bn fall in Facebook’s market capitalisation, we have witnessed a great tech sell-off that may point to a watershed in the value versus passive investment saga. Yet by now, as in the tech bubble of the late 1990s, many value investors (who buy stocks because they are cheap compared with their fundamentals) have thrown in the towel and bought into the Faangs. So is this a rerun of the dotcom story?
Yes and no. Certainly a tired bull market has increasingly been driven by an ever shrinking pool of tech stocks, which bears some similarity to events at the turn of the millennium.