FAAMG

FAAMG is an acronym that refers to the stocks of prominent American technology companies in the internet and data space: Facebook, Apple, Amazon, Microsoft, and Alphabet’s Google.

Ubiquitous in our daily routines for several years, we now use FAAMG-related tools and products even more in our everyday lives during the months of lockdown, both for managing our professional duties and in our personal relationships. We can even say that in many cases, they have become the only means of maintaining social interaction.

Those companies are already an economic empire. Furthermore, the Covid-19 crisis has made it possible to give even more importance to the FAAMGs, which can now compete with the GDPs of the most developed countries. The figures are impressive – the FAAMG companies, as a combined economic force, are on pace to become even more powerful than entire countries.

Progressively, FAAMG climbed into a unique ranking that compares companies and states. In 2017, FAAMG were in the 5th position behind Germany. In 2018, they moved into 4th position just behind Japan and in 2020, the cumulative market capitalization of FAAMG reached more than $5 trillion. Placed now just behind China in the ranking.
Some would say that we are only talking about market capitalization here and that the figures are ultimately disconnected from reality, however, we can compare those in a different manner. The 2020 budget of the French Ministry of Higher Education, Research and Innovation is €25.49 billion, while the FAAMG budget for research and development exceeds €60 billion. Amazon alone could almost compete with France’s budget.

Investors are used to trading currencies in order to take strategic positions by anticipating capital flows resulting from political and macroeconomic trends. It is important to add the FAAMG stocks into the game of FX trading. Some FAAMGs, including Facebook, are not discrete in expressing their desire to play a role closer to that of a government following the creation of a digital currency… LIBRA! We could evolve towards a globalized economy in which the companies would take the role of the States and in which we would use Google Coin, Amazon Coin and Facebook Coin as the accepted currencies.

The future trade war would no longer be between the USA and China, but between the FAAMG and the BATX (ref. Baidu, Alibaba, Tencent, and Xiaomi). One thing is certain, trading the shares of these companies in the same way as we could trade currencies, integrating political challenges and financial health of the company? Leverage Shares allows you to trade all of the FAAMG constituents with ETPs that multiply the daily movements of shares by 2x or 3x, and also allows you to benefit from the downside movement of FAAMG stocks.

As a trader, there is one important thing to clarify… Will all this continue to gain momentum and place FAAMG as a world-leading economic power? Or, will the monopolies currently in place give way to a dispersion of power due to “anti-trust” regulations or the arrival of new start-ups offering new generation and innovative solutions. We may have the beginning of an answer when we see that young people are sulking Facebook in favour of a solution like Tik-Tok.

Whether you are bullish or bearish on FAAMG, Leverage Shares allows you to capitalize on your convictions on American stocks with its short and leveraged ETPs. Listed on the London Stock Exchange and Euronext Paris, they offer a simple and safer way to trade as investors cannot lose more than their initial investment.