Dividends and Acronym bets like BRICs or FAANGs rarely endure

If you think about Twitter (and maybe you use it) the short news or short form is highly desired. For a wide variety of reasons, people like a short version to help them form opinions and even make decisions. If you consider the stock market, there are thousands of companies to choose from, most you likely should not buy, but there are many choices. To help make the choices easier, you begin to establish themes that the market leaders seem to have in common. The theme helps you understand what is happening and we all do it, we all look for the theme and when we all do it, the companies which do indexing and mutual funds bring out funds to reflect the themes to make it even easier to make a decision.

In an article by Jamie McGeever of Reuters, he tells us that many themes of the past change and they tend not to last for ever. Often the themes are a gift for investment marketing teams. We tend to think of the items in the grocery store as needing marketing, but marketing in the investment world is also worth billions.

It is important to understand that each component of the acronyms has unique characteristics and dynamics that demand they be taken on their own merits. In the FAANG group, after Meta (Facebook) reported its earnings, the stock went down in value by $230 billion, while Amazon jumped $190 billion.

Jim O’Neil who coined the BRIC acronym in 2001, when he was chief economist at Goldman Sachs stresses the concept is and was aimed at shining a light on the changing state of the world economy and need for change in global governance. At the time the BRIC countries economies were growing, the age of globalization was the buzz world and BRIC indexes were rising. Then some of the countries economies went down and a new group needed to be uncovered.

CNBC host and investor Jim Cramer coined the FAANG stocks in 2013 and they have been market leaders. What will be the next theme or acronym?

Linking to dividend paying stocks, owning stocks which make a profit and can pay dividends is never out of season, there maybe groups which outperform the dividend sector for a year or two, but when the group is out of favor, they tend to lose money and when did the average person buy the group? The investment world is similar to every other market in the world, there needs to be buying and selling for the industry groups to make money, while the investor if they can buy and hold for a long time, they make money and the industry group does not not. There will always be another theme, but owning stocks which are profitable is a good thing no matter how the market is doing.

There are more questions than answers, till the next time – to raising questions.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s