What are the FANMAG stocks?

I’ve been reading quite a bit about the FANMAG stocks recently. These stocks are Facebook, Apple, Netflix, Microsoft, Amazon and Google. These are the hottest stocks of the last decade, due to how well they’ve performed and how well known their services are. The hype around them started with only the FANG stocks (Facebook, Apple, Netflix, Google) after a stint of incredible growth, but have been expanded to include Microsoft and Amazon. Their growth from the end of 2009 to now is shown below (the graphic changes the acronym to FAMANG, but it’s the same thing).

Source: Albert Bridge Capital

Those figures are in 1000’s, so the value of these 6 companies has gone from over $700 billion to nearly $5 trillion in 10 years. That’s nearly a 600% increase! They’ve had a major impact on the overall market as well. The S&P 500 index is comprised of the 500 largest U.S. publicly traded companies. Within the index, the stocks are weighted according to how valuable they are (market cap), meaning the largest stocks get the largest weightings. At the beginning of this decade, those 6 stocks only accounted for 6% of the index. Today, it is nearly 17%.

As these companies have grown within the index, they have a larger impact on how the S&P 500 performs. As the chart below shows, during the last 10 years these 6 stocks have accounted for 30% of the S&P 500’s 246% gain. Said another way, 12% of all the growth from the top 500 companies have come from only these 6.

Source: Albert Bridge Capital

It’s difficult to conceptualize how large FANMAG’s $5 trillion market cap is, but the chart below gives an idea.

Outside of the U.S. and Japan, these 6 companies are more valuable than the stock markets of every other country in the world. In fact, Apple or Microsoft (each valued at about $1.2 trillion) by themselves would be just behind Australia (and ahead of Brazil) for the 12^th largest market in the world.

The million-dollar question is obviously whether these great companies can continue their run. History is not on their side. Since 1980, no company has remained in the top 5 in consecutive decades, besides Microsoft and Walmart. Walmart is no longer even in the top 10, showing how impressive it is for Microsoft to have remained at the top spot for so long. Perhaps this time it is different, as tech companies may be able to better stave off competition for longer periods than an energy company or bank, for example. Maybe the government intervenes to try and break them up. Regardless, it’s been an impressive run and I look forward to seeing how it all unfolds.