You read a lot about FANG stocks in the financial media. These mainstream tech stocks are strong, but not very volatile. They’re a big focus for investors and traders.
But for traders, focusing on FANG stocks can have limitations. I believe the best trading opportunities come from penny stocks. With them, you can study repeatable patterns. These are the patterns my top students used to become self-sufficient.
I’m not gonna tell you not to trade FANG stocks. But I want to show you that there can be better ways to trade. Keep reading…
Table of Contents
- 1 What Are FANG Stocks?
- 2 Why Do FANG Stocks Matter?
- 3 Should You Trade FANG Stocks?
- 4 What’s the Difference Between FANG and FAANG?
- 5 How Did FANG Stocks Perform in 2020?
- 6 How to Trade FANG Stocks
- 7 How to Short FANG Stocks
- 8 Is There a FANG Stock Bubble?
- 9 FANG Stock Charts
- 10 Apply to The Trading Challenge
- 11 What to Expect From FANG Stocks in 2021
- 12 Frequently Asked Questions About FANG Stocks
- 13 Conclusion About FANG Stocks
What Are FANG Stocks?
CNBC host Jim Cramer came up with the term FANG. It’s an acronym for the biggest tech stocks on the market: Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Netflix (NASDAQ: NFLX), and Google (NASDAQ: GOOG). The group later expanded to include Apple Inc. (NASDAQ: AAPL), adding a second A (FAANG).
The FANG companies became popular after the 2007–2009 recession, when their momentum helped get the economy back on track.
Back then, investing in FANG stocks was investing in the future. If you bought them years ago, you could be sitting on a gold mine.
But it’s harder to grow a small account with FANG stocks. It can be done with penny stocks if you have the dedication and work ethic. That’s why I LOVE them.
Want to know why I think penny stocks are such a great opportunity? Get my FREE online guide here.
Why Do FANG Stocks Matter?
FANG stocks represent trillions of dollars in market capitalization. Their performance can directly impact the markets.
They’re also heavily invested in research and development. This sets them aside from other big companies that have struggled to adapt. It drives their continual growth and creates millions of jobs in the process.
These companies are the kings of innovation. They’ve changed the world and probably aren’t going away any time soon.
But that doesn’t mean they’re the best stocks to trade…
Should You Trade FANG Stocks?
I’ll be the first to admit that I use all of these companies.
I have a presence on Facebook and frequently shop on Amazon. I enjoy watching Netflix, and I use Google anytime I’m online. So I use these companies’ products and services a lot…
But I don’t think their stocks are the best for day trading.
They’re not immune to pullbacks, as we saw earlier this year. These price dips can be hard to predict. Since they move with the overall market, major news like the 2020 pandemic crash could ruin a good pattern.
There’s also less volatility compared with penny stocks. If you’re a new trader, you might have to wait a long time to grow a small account with the slower-moving FANG stocks.
With penny stocks, the focus is more on price action than on company stories. You don’t have to hit a home run to make a good trade. Singles add up over time.
FANG Stock Performance
FANG stocks rose over 400% from the end of 2014 to the middle of 2020, according to CMG Wealth. In comparison, the S&P 500 only gained about 36%.
Each FANG stock is practically a household name — and the chart shows it. They’ve been outperforming the overall markets.
But that’s a long time to wait for returns. If you don’t have a large account, is it really worth it?
Penny stocks can go completely parabolic. The best setups can sometimes make 400% gains in one day!
My students and I have learned to take advantage of these volatile stocks by day trading them.
For less than $100, you can make a smart investment in your trading education. Learn the market basics and my favorite patterns. Get in my 30-Day Bootcamp today!
Is There a FANG ETF?
There isn’t one single exchange-traded fund (ETF) that contains only FANG stocks. ETFs are meant to diversify a portfolio. Having one with only four stocks would defeat the purpose.
AdvisorShares New Tech and Media ETF (NYBOT: FNG) is a close alternative. It has 25 stocks in its bundle, and they’re all related to FANG companies.
If you want only FANG stocks, your best bet, in my opinion, is to buy them individually with your brokerage or retirement account.
What’s the Difference Between FANG and FAANG?
The FANG stocks are the four major tech companies — Facebook, Amazon, Netflix, and Alphabet (aka Google).
The acronym was changed to FAANG in 2017, when Apple was added to the list.
How Did FANG Stocks Perform in 2020?
This year has been a wild one for FANG stocks. With the pandemic, we saw the economy almost completely shut down. The markets got destroyed!
A lot of major stocks, including FANG stocks, suffered big dips. Buyers that got in on the dip made out well…
But this wasn’t just a good time to invest.
When the recovery started in April, it brought a lot of volatility into penny stocks. It was an amazing opportunity for day trading!
The overall markets have now gone through a V-shaped recovery, and have seen new highs since the beginning of the year. This includes FANG stocks.
How to Trade FANG Stocks
Let me make one thing clear:
I’m not an investor and I’m in no way giving you financial advice. All trading and investing is risky. Never risk more than you can afford. Do your own due diligence.
FANG stocks all trade on the Nasdaq. They’re part of the S&P 500. Any standard brokerage or IRA account will let you purchase them.
The Best Way to Buy FANG Stocks
Before you buy FANG stocks, there are a few things to consider…
They usually trend upward because of how popular they are for long-term investors. But you can’t just blindly buy anywhere.
FANG stocks usually move together. The best time to buy is during a market dip. A great example was earlier this year. In March, the markets crashed to levels we hadn’t seen in a while.
The FANG stocks all pulled back, offering a good buy opportunity. Any kind of bad news can lead to a pullback. It’s important to wait for one so you avoid buying at the top.
Penny stocks don’t require such a complicated approach. It’s still a ton of hard work. But the traders are usually a lot faster … which is why I think they’re a better way to trade.
Disclaimer: I’m not an investor and I’m in no way giving you financial advice. All trading and investing is risky. Do your due diligence, and never risk more than you can afford.
How to Short FANG Stocks
Unlike penny stocks, FANG stocks are almost always liquid. That means there are always shares available to short. Most of the time, the shares are easy to borrow … your only fees should be short interest.
Plus, some large companies offer options to increase leverage. But the question isn’t if you can short FANG stocks. It’s if you should.
Unless you were shorting these stocks before the pandemic crash, there’s no real reason to short them now. They’ve all recovered.
I think shorting is dangerous in general. My best plays are all from going long on penny stocks.
Is There a FANG Stock Bubble?
The thing with bubbles? Most people don’t know about them until they pop.
With such a drastic pullback this year, it looks like most of the major selling has passed. Like I said, FANG stocks have risen over 400% since 2014.
The crash earlier this year had a lot of investors feeling nervous. But these stocks have recovered. The entire group has bounced off its lows and given buyers good returns.
Based on the price action of the FANG stocks, I don’t think they’re in a bubble. If it was a bubble, it should’ve burst when the FANG stocks plummeted this year. But they all bounced back.
And the companies are still growing. There’s plenty of room for them to expand further. Artificial intelligence and big data are just a few areas that hold potential for more growth.
But when day trading penny stocks, you can worry less about a potential bubble. Opportunities come on a day-to-day time frame. Your money isn’t locked up long term.
It’s another big reason I prefer to only trade penny stocks!
Want to know what stocks I’m watching this week? Sign up for my weekly watchlist!
FANG Stock Charts
So that’s my take on FANG stocks as a group. Now let me show you some daily charts…
FB Daily Chart
AMZN Daily Chart
NFLX Daily Chart
GOOG Daily Chart
Looking at a 10-year chart, you can see why people think FANG stocks are in a bubble. But these stocks have recovered from every major pullback!
Apply to The Trading Challenge
I created my Trading Challenge so that I could be an effective mentor. My focus isn’t on teaching my students how to trade FANG stocks or blue-chips … I teach them how to day trade penny stocks with repeatable patterns.
The Challenge is for traders who’re determined to learn self-sufficiency in the markets. But I’m picky with who I let in … I want hard workers ONLY. Sound like you? Consider applying.
If you’re accepted, you’ll have access to everything you need to build your education. This includes tons of video lessons, webinars, and more.
You’ll also have access to my Challenge chat room. It’s a community of hard-working traders who all have one thing in mind: becoming a self-sufficient trader.
I’m proud to be a transparent trader and teacher. I post all my trades on Profit.ly. Win or lose, I show them all, because I’m REAL. I passed $6 million in profits in 2020 using the same patterns I teach my Challenge students.* I’ve been trading for 20+ years and teaching for over 10. I now have several six- and seven-figure students who all became self-sufficient by using these lessons.*
If you’re willing to work hard, this community could be a fantastic opportunity to become a better trader.
Apply today and start your journey!
(*These results are not typical. Individual results will vary. Most traders lose money. My top students and I have the benefit of many years of hard work and dedication. Trading is inherently risky. Always do your due diligence and never risk more than you can afford to lose.)
What to Expect From FANG Stocks in 2021
With all the FANG stocks at or near all-time highs, it’s hard to imagine the sector not continuing higher.
Take a look at AAPL, which joined the FANG stocks in 2017.
AAPL and the other FANG stocks experienced a big pull this year. That pullback turned into their next leg up.
Until there’s more major news, there’s little reason to believe the stock will stop trending up. These stocks continue to grow, but there’s risk involved any time you trade.
If the market entered a recession, the FANG stocks would most likely follow. A pullback is part of a normal market cycle.
Also, there could be a higher risk with buying FANG stocks near an election. And remember, FANG stocks aren’t the only way to trade.
If you know what you’re doing, penny stocks can be a much better alternative. It doesn’t involve holding and hoping. You can worry less about what the overall market is gonna do next.
Frequently Asked Questions About FANG Stocks
What Does FANG Stand For?
FANG is an acronym that stands for Facebook, Amazon, Netflix , and Google. In 2017, Apple joined the list, making it FAANG.
Does FANG Include Microsoft?
Microsoft is not one of the FANG stocks. Analysts say people aren’t engaged with Microsoft in the same way they’re engaged with FANG stocks.
What Could Be the Next FANG Stock?
This would be speculation. Instead of trying to predict the future, I choose to trade penny stocks. The opportunities are more frequent, and you can potentially make huge profits in a single day. Never try to predict the market. Instead, learn to react to the patterns. That’s what I teach in my Trading Challenge.
Conclusion About FANG Stocks
Some financial institutions want you to believe FANG stocks are the hottest thing in the market.
That’s simply not true. Maybe you’ll see returns if you wait a long time, but there’s always risk involved.
In my opinion, there are way better trading styles available. If you have a small account, day trading can lead to growth much quicker than buying FANG stocks. It comes down to how much effort you put into your education.
The talking heads on TV hate penny stocks! But I love them, and I wouldn’t be where I am without them.
You don’t need to trade FANG stocks to become self-sufficient. If you focus on the right material, you can consistently trade in any market.
Learn to navigate any volatility the market throws your way … Get the “Volatility Survival Guide” and start prepping now!
What’s your take on FANG stocks? Let me know in the comments!