It's hard to believe that 10 years ago I created the FANG acronym from scratch.
The weekend prior to the "Off the Charts" segment on CNBC's "Mad Money," Jim Cramer asked me to help come up with a topic for the regular Tuesday segment. I recall Jim had a group of names he liked, including the acronym CANDIES, so I played off that and put together four high-voltage names that happened to spell FANG using their first initials -- Facebook (now Meta Platforms (META) ), Amazon (AMZN) , Netflix (NFLX) and Google (now Alphabet (GGOGL) ). Jim did an amazing job of promoting the acronym after the Feb. 5, 2013, taping.
Who knew how far this would go, but FANG has changed the way people look at stocks and investing as a whole. That's a huge positive if it is change for the good. You cannot go a day listening to financial news and reading financial news without hearing FANG multiple times. In a flattering way, many have tried to build new acronyms around FANG, but the original always stands.
FANG is easy and simple and creates an awareness about groups of companies that can dominate over the competition. We want to be invested in those types of companies.
To be sure, over the past 10 years, the FANG companies have had their share of troubles. Two of them even changed their names, which distorted the FANG name, though we all know the idea behind it.
Over the last 10 years, the FANG companies have caused new companies to form and compete, such as Snap Inc. (SNAP) , The Trade Desk (TTD) , Shopify (SHOP) and a slew of digital streaming platforms to compete with Netflix.
Speaking of Netflix, did you know NFLX was the best-performing stock among the quad, racking up a 1,247% gain over that period (adjusted for splits)? In second place is Amazon, with a gain of more than 800% over the 10 years, followed by Facebook/Meta and then Google/Alphabet. A composite return for the group of four if bought in equal amounts 10 years ago would have yielded a 780% gain, which is more than four times the 172% increase in the S&P 500 over that period. For the patient investor, that's a huge differential.
Sadly, many are starting to walk away from FANG, thinking these names just won't work any longer. This has happened so often over the last decade I wish I had a dollar for all the times these stocks were called by the grim reaper.
Question: Should you really exit or unload FANG from your portfolio? That might be a bad move, as more recently earnings from Netflix and Meta pushed these stocks higher. While their bottom lines were not great and growth was anemic, in a tough environment they did provide strong guidance for the future. And that is the true meaning of FANG -- seeing and owning companies with a bright future.
In the end, if you kill FANG as a group, you do so at your own peril. They live on and thrive on controversy and doubt. There is nothing wrong with FANG, and if history is our guide we should continue to own these four names for years as these stocks will roar once again