Hedge against FANG earnings with this ETF strategy $FB $AMZN $GOOGL (via ETFEdgeCNBC)
With the five FAANG stocks making up one-eighth of the S&P 500, the reverse-cap strategy might just offer the right counterbalance because these stocks wield more power over the major indexes, Nadig said.
"It effectively turns [the investment] into a mid-cap fund," he said. "When we see these big, large-cap momentum names like Google, Amazon, Facebook ... inevitably fall out of bed, the mid-caps tend to be what come up and pick up the slack." But for some, like Astoria Portfolio Advisors founder and Chief Investment Officer John Davi, these stocks are too cumbersome any way you slice them.
"As you get bigger in size [and] market cap, then you're going to be a bigger driver of these indices," he said in the same "ETF Edge" interview. "My whole premise is to invest away from market cap — to invest in factors [and] quantitatively driven ETFs.""I think you want to shy away from FANG and cyclical and growth stocks," he said. "I think you want to lean more on stocks that have strong earnings, high-quality stocks.
Facebook, which reports earnings Wednesday, climbed 2% in Monday's trading session and is up a whopping 54% this year. Amazon and Alphabet, which report Thursday, were up about 1% in Monday trading.
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