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DISCLOSURES: The information provided herein is furnished by Miles Capital, Inc. solely for informational purposes and is confidential. It may not be reproduced or distributed to anyone else without prior consent. This document contains the current views of Miles Capital and is not intended to be, and should not be interpreted as, a recommendation of a particular security, product, or investment strategy. Such opinions and predictions are subject to change without notice. The strategies described in the presentation may not be suitable for all investors. There is no assurance that any of the objectives described will be achieved. This information contained herein does not take into account the particular investment objectives or financial circumstances of any specific person or entity who may receive it. You should consult your tax or legal advisor before making an investment, and investors are advised to thoroughly and carefully review financial, legal, and tax consequences of all investments to determine suitability. Investments in alternative assets may be illiquid and present significant risks. Past performance is not a guarantee of future results. There can be no guarantee that any investment strategy discussed in this Presentation will achieve its investment objectives. As with all strategies, there is a risk of loss of all or a portion of the amount invested. Diversification does not ensure a profit or protect against market loss.

How 4 Tech Companies Are Dramatically Shaping the S&P 500


Just four mega-cap technology stocks — Facebook, Amazon, Netflix and Alphabet (Google’s parent company) — have been responsible for much of the S&P 500’s upside over the past several years.


The so-called “FANG” group of companies has a combined market cap of around $2.3 trillion. Add in Apple and Microsoft (leading to terms such as “FAANG” or “FAAMNG” for the expanded group) and the total jumps to $4 trillion. Each of these companies is dominant in their field and has dramatically outperformed the market over the past six years.


The S&P 500 has jumped 22% since late December, when concerns over higher interest rates dropped the index to an 18-month low. The rally has been led by tech companies, with the S&P 500 information technology index up 32%. The FANG stocks have led the way, with Netflix up 56% and Facebook climbing 43% since Dec. 24.


It’s startling to see how much these handful of companies are propping up the valuation of the index — and there are signs that the long rally may be coming to an end.


In early June a wave of antitrust-probe news surrounding Facebook and Google prompted a selloff, wiping out about $137 billion from FANG stocks’ market values. The other two FANG behemoths — Netflix and Amazon — also dropped significantly.


There are structural issues at play as well.


“Early-October 2018 saw Facebook, Amazon, Netflix and Google (FANG) break below a short-term uptrend after forming a head and shoulders top,” strategist Stephen Suttmeier wrote in a note to investors, as reported by CNBC. “This was a canary in the coal mine for the late-2018 U.S. equity market correction.”


What is clear is that these four companies have changed the profile, and increased the valuation of the S&P 500 Index as a whole. The forward Price to Earnings ratio (P/E) of the index was 16.1 as of May 30th. However, without the FANG companies, the P/E was 15.0.

Disclosures
 

The views expressed herein are the current views of Miles Capital as the stated date and are provided for informational purposes only. They are believed to be correct, but accuracy and completeness cannot be guaranteed and should not be relied upon for legal or investment decision purposes. All expressions of opinion and predictions presented are subject to change without notice. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is not a guarantee of future results. Diversification does not ensure a profit or protect against market loss. As with all strategies, there is a risk of loss or all or a portion of the amount invested.