Don’t underestimate traditional company stocks

The beginning of July has brought more fireworks for the high-flying technology stocks after a June that turned into their first down month of the year.

It wasn’t just the FAAANG stocks, although they were standouts on the downside. So what gives?

While there is no denying that Facebook, Amazon, Apple, Netflix and Alphabet (formerly known as Google), are innovation all-stars, they do have to compete for investor dollars.

The funny thing about today’s stronger economic growth, which is absolutely a good thing, is that it isn’t necessarily the best environment for growth stocks. The irony is rich.

While there is no denying that American ingenuity has morphed the world into a hyperspace of technological change, other, more traditional companies do exist too, and they do conduct commerce, and they do make money.

For example, some homebuilders, are achieving multiyear highs on this economic growth, as supply has tightened dramatically.

Even the big banks, which now can lend to customers at much higher interest rates while still paying depositors a pittance, are feeling the power.

Many of the Dow Jones industrial-type companies, like DuPont or United Technologies, are all moving up.

Other traditional, boring companies — where people over 26 aren’t considered old — actually need economic growth to thrive.

Over the last 10 years — beginning with the Great Recession — the FAAANGs had incredible moves, irrespective of the economy.

But things may be changing. The economy is picking up steam from its 1.6 percent average during President Obama’s eight years and looks to be coming in around 3 percent for the second quarter, according to the Atlanta Federal Reserve.

So the transition to traditional stocks may well be under way.

But don’t worry about those go-go techs. They’ll be fine.


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