In the old days when people didn't know what to do, when sellers came in and crushed favored groups, the traders fled to safety. What was safety? General Mills, Inc (GIS) , Procter & Gamble (PG) , Kimberly-Clark Corp (KMB) , Campbell Soup (CPB) , Colgate-Palmolive Co (CL) .
Not anymore. These days they flee to FANG. The moment that health care was upended by the Presidential order to eliminate subsidies for Obamacare, the United Health Products' (UEEC) of the world came under tremendous pressure. When Citigroup (C) gave the market an elevated credit card loss number-something I think is transitory and not that important but the market feels otherwise-traders abandoned the banks.
Now, sure it helps that Netflix put through a price increase and analysts are falling all over each other to recommend it ahead of next week's earnings. Netflix has been the major villain in the cord-cutting wars because it costs a fraction of what you pay monthly to your cable company, yet it gives you pretty much all you need for millions of people.
But the FANG surge is truly incredible given the headline risk, namely that old-line media has coalesced on the idea that these companies are too powerful and not necessarily for the good.
So what explains the love, the belief that these stocks are the safest? I think it's because they have become the modern-day mall and supermarket. Advertisers want to be there at the point of sale. They want shoppers to remember to buy their products and not the products of others when they go shopping.
The old point of sale was the endcaps at a supermarket or the mall itself, especially the anchors.
These days, the point of sale is your cellphone -- and Amazon, Alphabet and Facebook are all at that point of sale. The more e-commerce done, the more vital are these sites. Not only that, but brick and mortar is so inefficient versus these companies when it comes to worldwide distribution. Advertising on TV or in a store targets hundreds of millions of people who have no interest and never have an interest in buying your product.
But advertising in "What Would Virginia Woolfe Do?" -- a popular site among women in their fifties -- is the ultimate place to put your Oil of Olay ad because 100% of the people reading it are thinking of which product to buy in that category. Do you think these people care that some sites have been hijacked by bad actors from overseas? Sure, there are some advertisers who are concerned or at least feign concern, but they have no choice. As Cheryl Sandberg has said over and over again, the return on investment is there for Facebook. You can figure out the ROI for being on Amazon and Google, too.
It's highly unusual for non-dividend-paying, high-multiple stocks to be the blanket of safety that these have become. But their growth has nothing to do with the economy. It's purely secular and worldwide.
So these have become the default stocks. Until something replaces them in terms of their commonality -- which is the love of the consumer -- I think it stays that way. The Procter & Gambles and the Kimberly-Clarks of the world used to be the international consumer stocks that you could gravitate to when health care or banks broke down.
You just get long FANG.
Join Jim Cramer, CNBC's Jon Najarian and Other Experts Oct. 28 in New York
Jim Cramer will host CNBC's Jon Najarian, TD Ameritrade's JJ Kinahan, famed analytics expert Marc Chaikin and other market mavens on Oct. 28 in New York City to share successful strategies for active investors.
You can join them as they discuss how smart investors can make the most of options trading, futures contracts, fundamental and quantitative analysis and great ETFs to buy right now. Participants will also get a chance to meet Jim and other panelists and take photos.
When: Saturday, Oct. 28, 8 a.m.-3 p.m.
Where: The Harvard Club of New York, 35 West 44th St., New York, N.Y.
Cost: Special sale price: $150 per person. (Normal price: $250)
Click here for the full conference agenda or to reserve your seat now.