Ever heard of the FANG stocks?
If you’ve been following markets over the past decade, you probably have. Coined in 2013, the term ‘FANG’ or ‘FAANG’ refers to some of the best-performing blue-chip tech stocks in history: Facebook, Apple, Amazon, Netflix, and Google.
Posting consistent and outsized returns, the FANG stocks came to reflect a broader sentiment among investors during the bull market of the 2010’s – that the market just couldn’t lose. Many retail investors achieved significant growth simply by jumping on the bandwagon.
But with inflation, international conflict, and market volatility on the rise, the easy money mentality of the 2010’s is shifting quickly. Investors are becoming increasingly aware that the FANG stocks – and the stock market in general – aren’t the sure thing that they used to be.
Enter the new FANGs. Many analysts are now suggesting that the current cycle will be defined by physical assets: Fuel, Agriculture, Natural Resources, and Gold. In this article, we’ll explore the old FANGs, the new FANGs, how this shift occurred, and what it means for the investing public.
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What are FANG stocks, and why were they the no-brainer investments of the past decade?
When analyst Jim Cramer coined the term FANG about a decade ago, these tech giants were already well-established companies – but their growth since then has been unprecedented. The FANG stocks achieved consistent and outsized performance, each doubling in value between 2017 and 2022. While it lasted, these tech giants were as good as it got.
These blue-chip tech stocks consistently provided investors with a relatively low-risk, high-reward investment option. It’s no wonder that the FANGs were the subject of so many investment conversations in the mid to late 2010’s. You didn’t need to be an expert – just follow the catchy acronym.
But things are changing, and fast. Overall economic trends have shifted substantially following the COVID-19 pandemic, causing a striking downturn in their performance. Even Jim Cramer has stated that the FANG stocks are starting to lose their luster.
As investors take note of the changing economic winds, the FANG tech stocks’ high levels of speculation, market volatility, and dependence on zero interest rates are causing these assets to fall out of favor.
This natural reminder of the stock market’s ever-evolving nature has people asking what’s next. Will there be new FANGs? Something with which people can achieve reliable, high levels of growth with minimal risk?
FANGs 2.0: fuel, agriculture, natural resources, and gold
The answer, according to some, is a new set of FANGs: fuel, agriculture, natural resources, and gold. These asset classes may not sound as glamorous as the previous FANGs, but they’re quickly becoming the industries to watch.
As talk of the new FANGs makes the rounds in investment circles, it’s clear that economic circumstances are changing rapidly. The end of zero-interest monetary policies coupled with historic inflation levels in 2022 showed us that the seemingly unbridled economic growth of the past decade couldn’t continue forever.
The rising stars of these sectors show a strong shift away from speculative and fanciful tech plays (like NFTs, on-demand everything, and virtual reality) toward grittier, real-world assets governed purely by supply and demand.
A growing global population coupled with international conflicts like the war in Ukraine and escalating trade stress between the U.S. and China highlight the solid fundamentals and foundation for long-term success these new FANGs appear to have.
For example, agriculture is central to the new FANGs and has historically strengthened portfolios regardless of economic conditions. An ever-growing population needs to eat, and the demand for agricultural products doesn’t typically fall during recessions.
Historically, agricultural investments have outperformed most other asset classes and offer several additional advantages that others can’t. While gold is a popular hedge against inflation, it can’t produce income or generate cash returns. And although fuel and oil continue to drive many aspects of transportation and travel, prices depend on market sentiment from both producers and consumers.
Strategies for the new FANGs
If you’re looking to gain exposure to the new FANGs, there’s no shortage of options. Publicly traded assets like ETFs, farmland funds, or individual stocks allow access to these asset classes. However, one less conventional strategy could prove to be the most lucrative: investing in physical assets like farmland.
Farmland ownership offers incredible advantages that could benefit most investors. It allows for diversification outside the stock market and has proven to be a reliable store of wealth. But agricultural land has an additional lever other classes don’t: it also produces income from crop sales.
Farmland’s physical aspect and dual income streams provide an attractive opportunity for investors interested in adding an inflation- and recession-resistant asset to their portfolio, one with steady cash flow and long-term land appreciation.
To learn more about the new FANGs and how agriculture can benefit your portfolio, complete the form below, and someone from the Farmfolio team will contact you with more information.