Monday, October 16, 2017

FANGS vs Nifty 50

The US markets are nearing all time highs with the NASDAQ rising for the third straight week and closing at 6624. Jim Rogers mentions in an interview the similarities between the 1970's and now in 2017.

"I remember in the early 70's, there was something called the Nifty 50, and they were 50 stocks that everybody - JP Morgan bought everyday. Didn't matter. Avon, Xerox, IBM - they were stocks that always were eternal growth stocks. And they just kept - we would short them, and they just kept going up. They never stopped. Polaroid-- that was another. And they just never stopped going up. 
Everything else stopped going up but those Nifty 50, which would be something like the FANGs today, or maybe in the late 90's, some of the other kinds of stocks. So this has happened before in market history. They eventually crack, there's no question.  
And to today, if you look at the S&P 500, for instance, in the US, I think there are only 40 or 45 stocks that are above their 50-day moving average, to use technician's kind of talk. Everything else is in a downtrend. And yet the market is making all-time highs.
What is that - over 90% of the stocks are in downtrends. 10% are in uptrends, but they're big companies. And since the S&P is capitalization weighted, those 50 stocks, 40 stocks, whatever it is, dragged the average to all-time highs."

Jim Rogers is a smart investor who co-founded the Quantum Fund with George Soros in 1973. By 1983 the fund gained more than 4000 percent.