nasdaq

Revisiting FAANG vs. NYSE

Back in September, I made a couple of posts (here, here) about how extrapolating the great FAANG returns from the prior 12 months would probably lead to underperformance and disappointment. Let’s see how that prediction worked.

FAANG stocks have underperformed by about 15% over the last 7 months. This is only natural after their huge run. The question is… will the underperformance continue?

The ratio of the NASDAQ to NYSE is still elevated, which would imply continued underperformance of the NASDAQ. Note that FAANG stocks represent 31%of the NASDAQ 100 weights.

The ratio of the NASDAQ to NYSE

My expectation over the next few years is the NYSE – aka boring stocks – will do better than NASDAQ.

By Christopher Schwarz, ago

Cathie Wood’s ARKK: 2 of Beta, None of Alpha

Of course, Cathie Wood and ARK Invest have been the talk of the markets after her big bet of Tesla and huge returns last year. The problem? Cathie has 0 alpha. Her fund is just mimics a super levered NASDAQ position.

Here is a graph comparing the returns of ARKK ETF to the returns of the QQQ (NASDAQ 100) with 2x leverage.

As you can see there is nothing special about ARKK. It just has some super volatile stock positions that make it really risky. However, it has 0% alpha. It’s just another boat up a river without skill.

By Christopher Schwarz, ago