Investors who have been blindly buying all big techs got a rude awakening this week after Netflix imploded. But the good news from Tesla proves that some top momentum stocks can still thrive in this rocky market.
The latest results from Tesla (TSLA) and Netflix (NFLX) show how silly it is for investors to buy into themes and memes like the FAANGs, or MT. FAANG, if you want to add Microsoft (MSFT) and Tesla to the Facebook (FB) (Meta)/Amazon (AMZN)/Apple (AAPL)/Netflix/Google (GOOGL) (Alphabet) quintet. This is a stock picker’s market. “This environment will create an important backdrop for active investing,” said Ken McAtamney, head of William Blair’s global equity team, in a report.
“Understanding companies with differentiated business models, unique cultures, and durable competitive advantages will be increasingly crucial to determining investment performance in this complex environment,” he added, noting that “the dynamic shifting of corporate winners and losers remains a constant.” One of the biggest mistakes that an investor can make is assuming that all stocks in a certain sector should rise and fall in tandem. That’s an overly simplistic, binary view of the world. Instead, investors need to do their homework and find companies with strong business models and healthy fundamentals. “Not all businesses are created equally,” said Paul Moroz, chief investment officer with Mawer Investment Management.