I respectfully disagree with your framing on the FAANG stocks. If we accept that MATANA is the new FAANG (as per recent Yahoo Finance article), and we equal-weight a basket of those 6 stocks, we don't get a particularly diversified portfolio by any means, but we do get a wealth machine that backtests extremely well, including far before 2020.
Given those extreme results and the fact these companies are all massive, moaty, and generally profitable as heck, I think most retail investors who wound up in this camp can be considered rationally greedy. At least half of these names (MSFT, NVDA, & GOOG) look quite attractive to me at today's valuation, and could become even more desirable if the market keeps shunning.
I respectfully disagree with your framing on the FAANG stocks. If we accept that MATANA is the new FAANG (as per recent Yahoo Finance article), and we equal-weight a basket of those 6 stocks, we don't get a particularly diversified portfolio by any means, but we do get a wealth machine that backtests extremely well, including far before 2020.
For instance, even including 2022's mean reversion, please see a backtest here: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=2&startYear=1985&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=MSFT&allocation1_1=16.70&symbol2=AAPL&allocation2_1=16.66&symbol3=TSLA&allocation3_1=16.66&symbol4=AMZN&allocation4_1=16.66&symbol5=NVDA&allocation5_1=16.66&symbol6=GOOG&allocation6_1=16.66
Given those extreme results and the fact these companies are all massive, moaty, and generally profitable as heck, I think most retail investors who wound up in this camp can be considered rationally greedy. At least half of these names (MSFT, NVDA, & GOOG) look quite attractive to me at today's valuation, and could become even more desirable if the market keeps shunning.
Neil, that is a great point. These mistakes are targeted for the year 2022.
Past 10-year cumulative total returns were not taken into account.