It took a while for Big Tech to shine again, but it seems the time has finally come. After the FAAMG Group peaked within the pandemic in September (see chart below), these high-capital technology stocks were traded sideways until the end of the first quarter of 2021.
With June almost over, FAAMG rose a significant 15% in the second quarter alone, generously beating its “mirror image” of Russell 2000. Within Big Tech, Apple shares (AAPL) – Download Apple Inc. (AAPL) report day by day it looks stronger as it approaches its $ 143 peak a month ago which I believe will be strong for the Cupertino company.
Read more from Apple Maven: Buy Apple stock before the beginning of July
A turnaround in technology
In the world of investment, there is an old saying that the market is not an economy. In other words: stock prices can vary apart from business fundamentals or macroeconomic factors. That seems to have been the case at Big Tech. Take Apple for example.
IPhone achieved outstanding results in the second fiscal quarter. All segments grew by at least 24% compared to last year. However, in the two months following earnings day, the AAPL traded lower by 8%. At one point in March, almost 20% withdrew from the peak at the end of January. This seems like a contradiction.
What happened to Apple and its colleagues was a classic case of cyclical rotation. With the reopening of the economy, investors have gathered in sectors such as banks, industry and materials. The technical companies continued to do well, but their shares did not.
Now, with the FAAMG rising again, in part due to yield stabilization, the following has happened in recent days:
- Microsoft became only the second U.S.-based company to be valued above $ 2 trillion;
- Facebook has joined the club with a market capitalization of $ 1 trillion;
- Shares of Amazon and Apple left the correctional area, and the former almost set a new record in June.
Read more from Apple Maven: Apple stocks: Why waiting to buy is a bad move
Is it time for cash?
I have a problem with the idea that stocks should be sold just because they have reached (or will soon reach) record prices. Over time, the value of high-quality stocks grows. If investors dispose of FAAMG shares just because they have come together, a multi-year gain can never be earned.
In the case of Apple shares, I stand by my position that the shares should be held at least in July, if not for a much longer period. There are at least two short-term reasons, plus one much more important long-term factor, that support my optimism:
- Apple stocks tend to perform better in the summer, as new iPhones and holiday shopping seasons are expected;
- Stock markets have been quiet lately, indicating less instability in the near future and the possibility of superior risk-adjusted performance in the foreseeable future;
- Basically, Apple is going through a period of high demand for its products and services, which is good for long-term stock performance.
Apple Maven recently asked Twitter for an opinion on how Apple shares could act in July. Below are the answers:
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(Disclaimer: This is not investment advice. The author may have one or more shares listed in this report. The article may also contain affiliate links. These partnerships do not affect editorial content. Thanks to Apple Maven for support)
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