For those looking to invest in the hottest stocks on the market, now may be the time to consider investing in some of the biggest FAANG names, or not. These include Facebook (Meta), Amazon, Apple, Netflix and Google. These companies are all expected to benefit from rising inflation rates, as higher prices result in increased revenue and profits. The increasing interest rates may on the other hand put significant strain on these stocks. While there is always risk involved when investing in stocks, investing in these high-growth companies could lead to significant returns over the long term.
What are FAANG stocks
FAANG stocks are a group of technology stocks that include Facebook (Meta after the name change), Amazon, Apple, Netflix, and Google. Hence the name FAANG, however, the original acronym was FANG as proposed by Jim Cramer on CNBC back in 2013. These stocks have seen significant growth in recent years and are often considered to be a representation of the overall stock market. Many investors see these stocks as a way to get exposure to the tech sector and believe they will continue to grow in value.
Fed Increases Interest Rates – Is It Time to Sell FAANG?
The Federal Reserve has started to increase interest rates, and investors are wondering if it is time to sell FAANG stocks. The Fed believes that the economy is strong enough to handle higher interest rates, but some investors are concerned that the stock market is too volatile and could fall further when interest rates continue to rise. FAANG stocks have been outperforming other stocks in the market, so some investors are selling these stocks in order to take profits. However, others believe that the Fed will continue to raise interest rates slowly, and that FAANG stocks will remain relatively strong even after the stocks depreciated over the past few months.
FAANG Stocks: Winners or Losers With Rising Inflation and Fed Hikes
As the Federal Reserve has started to hike interest rates, the question which stocks will be winners and losers arises. The FAANG stocks have been a major driver of the stock market rally in recent years, but with the past few months of a falling market and a rising inflation environment with increased interest rates as a result, they may not hold up.
A 0.5% hike by the Fed the other day as expected indicates a “less hawkish” Fed, however, this only temporarily helped calm the skitterish stock investors who soon found the sell button once again. Several analysts have raised concerns that Fed will act too aggressive in raising interest rates to tackle the inflation. This could put even more pressure on tech stocks, which are seen as vulnerable to higher interest rates.
Should You Invest in FAANG Stocks
Well that is a difficult question and something only you can answer really. It depends on your time frame for your investment. In the long run FAANG stocks are seen as relatively strong stocks and therefor could pay off well if you have a long time frame. In the short term they may very well fall further in value. So when to invest? Timing the bottom is not a good strategy since no one really can predict that. The stock market has always historically come back higher after a big fall. The question is how long it will take.