FAANG, MAMA ANT, and AI5. The financial markets change fast, and so should your traders’ portfolios, to optimise their earnings and drive revenue growth for you.
Are your traders keeping pace with the dynamic markets? Here’s why you should care and how you can support clients to stay on top of the latest market developments.
A Peek into the FAANG Era
Jim Cramer coined the term FAANG, which became all the rage in the stock markets in 2017. The acronym stands for the top five technology companies, Facebook, Apple, Amazon, Netflix, and Google. The collective success of these five stocks earned investors’ loyalty for over five years. The 5 tech giants maintained their position till 2021, when Netflix’s market cap tumbled to $130 billion, and Facebook was renamed Meta. Cramer revised the acronym to MAMAA, dropping Netflix and adding Microsoft. As of September 2022, the 5 held nearly 22% of the S&P 500’s total market cap of $30.1 trillion.
With monetary tightening, technology stocks took a hit and declined 13% in the first three quarters of 2022, that is when the Magnificent Seven (Mag 7) was born.
Rise and Fall of the Magnificent Seven
MAMA ANT emerged as the FAANG dominance subsided, with Meta losing its place in the top 20 stocks in October 2022. Despite significant ups and downs, Meta managed to recover its place among the big tech. Additionally, Nvidia and Tesla joined the league with their pioneering advancements in the AI space.
Through 2023, Nvidia and Meta climbed the highest, rising 239% and 191%, respectively, while Apple registered the lowest growth at 52%. However, the benchmark S&P 500 rallied only 24% through the year. Notably, Mag 7 widened the gap between the top segment and the rest of the S&P 500 stocks. By December 2023, Mag 7 together had risen 75% over the previous 12 months, while S&P 493 (S&P 500 – Mag 7) had only registered an uptick of 12%. The gap of a whopping 63 percentage points didn’t just raise eyebrows, but it signalled that the tech bubble was ready to burst. But was it really?
Whether the bubble bursts or not, market sentiment indicated that investors were sceptical. Proactive market analysis with sentiment data, procured from diverse sources, including social media and high-precision technical data, can be a gamechanger for trading experiences in these scenarios. Acuity's AnalysisIQ empowers your traders with the right knowledge, along with an opportunity score to help them make informed trading decisions in real time.
Through sentiment analysis and alternative data, you can help them prepare for the shifts in the market. With easy-to-integrate tools, AnalysisIQ offers an intuitive interface to ease the life of traders. Plus, the customizable tool allows you to align it with your brand.
Rapid Rotation of Stocks in the Top Segment
In the latter part of 2023, AI5 began to rise as the new favourite among investors. These were the top 5 companies with AI at the core of their business and included Nvidia, Microsoft, Advanced Micro Devices (AMD), Taiwan Semiconductor Manufacturers, and Broadcom (A part of Avgo since 2016).
While the Mag 7 still has room to run, a new group is emerging even before AI5 has had a chance to prove (or disprove) its mettle – that is the Fab Four. Analysts predict Visa, CrowdStrike, Shopify, and Nvidia as the potential leaders of 2024. It is interesting to note that the technology-heavy high market cap arena has diversified to include other industries, such as finance and cybersecurity.
What to Expect in 2024 and Beyond
In an increasingly uncertain global economic landscape, stock performance and investor sentiment shift rapidly. As of April 2024, the era of Mag 7 has not yet fully ended, while AI 5 and FAB4 are still shaping up. Whether they can replace the Magnificent Seven is still to be seen.
Traders need accurate insights, and they need them fast. Brokers can look to support their clients with insights into market sentiment to take advantage of early moves in the cycle to reap maximum benefits. NewsIQ is a powerful tool that captures breaking news and puts the spotlight on the latest developments with commentary straight from the renowned Dow Jones Newswire.
As new assets and instruments take the place of previously popular ones, encouraging your traders to explore the markets is key to enabling continued activity. On the one hand, your traders need personalised educational content and market updates, and on the other, they need the ability to diversify into newer asset classes. This is where an asset-focused research tool can help you. Acuity’s AssetIQ has helped brokers worldwide support their traders to expand their portfolios.
Explore our dedicated solutions for retail and institutional traders. Speak to our experts or schedule a demo to learn how Acuity can power you with sharp and timely investment data.
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