What Does Year End Look Like Across Key Equity Sectors?
Watch Portfolio Manager Marc Pinto as he talks to Bloomberg TV about opportunities and disruption in energy, industrials and FANG stocks. He also discusses his outlook for growth.
Scarlet Fu: I want to bring in our guest Marc Pinto. He is a Janus Henderson Portfolio Manager.
Marc, what’s your read on technology? Obviously, the FANG Stocks have gotten hammered, and today they’ve recovered a little bit, the New York FANG index for instance, somewhat higher even as Apple and Amazon continue to decline. How do you see this going forward? Because some argue there’s massive re-rating of the sector. Others say it was just because they were too growth-y and they’re bid up too much, and we’re getting a reversion to the mean.
Marc Pinto: Yeah, so I think if you look at the business of those companies in general, they’re doing very well, right? We’ve had a lot of discussion about companies that are disrupting and companies that are being disrupted. And clearly the stocks in the FANG index, Amazon being a great example, are disrupting and increasing the amount of industries that they touch. So in terms of valuation, a lot of the companies, Alphabet for example, the valuations have actually not moved that much higher because the earnings and cash flow have grown. So the valuations I argue are still reasonable, the growth outlook is still good.
And, again, I think it’s just a little bit of profit taking. These stocks have done awfully well, and I think people are going into year end and want to protect their gains to the extent they have them. But I don’t think there’s a fundamental change in a lot of these business models.
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Technology industries can be significantly affected by obsolescence of existing technology, short product cycles, falling prices and profits, competition from new market entrants, and general economic conditions. A concentrated investment in a single industry could be more volatile than the performance of less concentrated investments and the market as a whole.
FANG stocks refer to Facebook, Amazon, Netflix and Google (now Alphabet, Inc.)
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