It's been a hairy week for the most important stocks in the market.
The so-called FAANGs (Facebook, Apple, Amazon, Netflix and Google/Alphabet) were having a wobble.
But last night, Apple announced its latest set of results. It beat expectations and cheered everyone right up.
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So now everyone is keen to point out that the FAANGs aren't really all the same.
But will that be enough to save them when the crash comes?
A magnificent triumph of branding
Apple is a magnificent example of the triumph of branding, combined with the power of networks.
"Who would pay a grand for a smartphone?" we all sneered, when the iPhone X launched. Lots of folk, it seems. While Apple's main rival Samsung has seen disappointing sales of its latest flagship phone, the same can't be said for Apple.
It's little wonder. If you own an iPhone X, you're making a statement. That statement will range from "hipster legend" to "flash twit", depending on your audience, but it's a statement. Pull out the latest Samsung (or other model), and it's just not the same thing. (I say this as the owner of an elderly Samsung).
And once you're invested enough in Apple to slap down a grand for a phone, you're also heavily invested in the Apple ecosystem. Your music library, your backup storage all conducted and kept in Apple's carefully curated walled garden.
The more you invest, the harder it is to walk out of the door. That's a powerful business model.
Anyway Apple's results were decent. They beat Wall Street expectations. And after disappointments from the likes of Facebook and Netflix (and angry ickle Twitter, chirruping away in the corner like a demented, venomous sparrow), suddenly everyone's breathing a sigh of relief.
You know what else is a magnificent example of branding? The whole idea of FAANGs. "Hot tech stocks" doesn't quite have the same ring.
But an acronym only goes so far. Once some of the stocks start to look less hot than others, it gets tricky.
So now, the industry voices are harrumphing, "Of course, you can't lump all of these companies in together". Keenly aware that we must be somewhere close to the end of the run for this sector of the bull market, fund managers and other pundits are now trying to break up the supergroup that has been responsible for the best part of the gains seen in the S&P 500 in recent years.
Which FAANG would you buy and hold for ten years?
They have a point. I mean, clearly there are huge differences between these companies. For example, which of the FAANGs would you bet on still being around in something close to their current incarnations in ten years' time?
We'd probably all have different answers. But I'd be comfortable betting that Apple and Amazon will almost certainly be there. They might be the IBM and Walmart of the day big but boring but an extinction event seems unlikely. Of the two, Amazon is probably more vulnerable to a political backlash, but consumers like cheap, convenient stuff, which also gives it a bit of protection.
Alphabet I'd assume would be there, although its business model strikes me as being vulnerable to a radical change in search technology (I don't know how this might happen, but I can imagine in a world in which "Googling" is seen as a quaint way to find stuff).
Facebook I can see as being vulnerable to a number of things, from a social backlash to tighter regulation. Facebook, of course, owns a lot more than just the Facebook social media site itself, but I can certainly imagine the company facing full-on existential challenges in the near to mid-term.
Probably the most vulnerable is Netflix. It's a good service and I'm all for it for those of us who still harbour secret ambitions of being Hollywood screenwriters, it's comforting to see huge amounts of money being invested in a vast make-work scheme for experimental (or just plain bad) telly, with the occasional absolute gem being churned out in the process.
I'm not saying it can't go the distance. But of all the big tech stocks, it's the one that looks most vulnerable, to my mind. Certainly, if you told me that I absolutely had to choose a FAANG in which to lock up all my money for ten years, I'd probably stick it in Amazon, and Netflix would be last on my list. (We can hopefully return to this prediction in 2028 and you can laugh at me.)
If the FAANGs fall out of favour, they'll all fall together
However. The nice thing about being an investor in a relatively free market is that you don't have to invest in any of the FAANGs if you don't want to.
And the point I'm making here is this: it's perfectly possible indeed, normal for a group of popular stocks to have little in common beyond a stupid acronym. Remember the BRICs? In retrospect, it really is hard to think of four less similar economies Brazil, Russia (oil exporters), India, China (oil importers). But they were all lumped together as the hot emerging markets at one point.
And a lot of the money that flooded into them indiscriminately flooded out of them with just as little thought.
The same happened with the so-called "Nifty Fifty" stocks in the late 1960s and early 1970s. Big "one-decision" stocks (ie, buy and hold forever) were all the rage. And then they weren't. Just as with the FAANGs, some of those were a lot better than others: Coca-Cola was a keeper; Polaroid wasn't.
Are individual FAANGs overvalued? Some look better value than others. But as a group, until Facebook's little mishap the other day, those five stocks between them had a higher market capitalisation than the entire FTSE 100 or the entire Nikkei 225.
In other words, you could have bought the entire equity of every big UK bank, the big oil majors, the big pharma companies, the odd utility, a bunch of miners and it would have cost you less than purchasing the FAANGs.
Those companies are valuable. But they're not that valuable.
In short I'm not a buyer of any of the FAANGs right now. I'll happily hang on to them as part of a well-run, high-growth investment trust (eg, Scottish Mortgage (LSE: SMT), because I know that it's impossible to call the high in these stocks.
But my main point is don't fall for the new hype. Yes the FAANGs are all different. But too many people have bought them for the same reason because they're hot tech stocks. And that means the same people will sell them en masse when they're not hot anymore.
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