Tue. Sep 29th, 2020

There was a message from investors during the two days of Facebook founder  Mark Zuckerberg’s testimony to Congress last week: in both of the sessions Facebook stock increased in value  despite the fears of possible regulation by the government  of this extraordinary digital giant. At the same time  the shares of Amazon, Apple and Google were among the widely traded issues, though no longer at their peak valuation. These four stocks had been among the market leaders of  the broad Standard & Poor’s index during the  ebullient market of 2017. If you add Netflix to the group, it rounds out the formidable FAANG stock market leadership that has received so much publicity in recent years.

The Zuckerberg and Google hearings have raised questions about the future leadership of these digital titans in the American economy. That’s why I read a book about them called The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google, by Scott Galloway, an NYU business school professor that was a New York Times bestseller.  I recommend it highly to every investor who wants to understand the powerful pull of these influential companies. The book also has insights into Alibaba, the Chinese online retailer, Tesla, the electric car manufacturer, Microsoft, Wal-Mart and Uber. The book neatly captures the insights that make these giants the favorites of plucky investors as enormous profits have been rung up in recent years.

As everyone should realize by now, “Amazon will win, as it’s playing poker with ten times the chips. Amazon can muscle everyone else out of the game,” writes Galloway, in a book that illuminates why these internet giants are bound to increase your net worth faster than many other investments. Amazon is the “earth’s biggest store,” quips Galloway. “The immense value Amazon has delivered to consumers has created the most trusted and reputable, consumer brand on the planet.”Not only that, but “while the world still thinks of Amazon as a retailer, it has quietly became a cloud company-the world’s biggest.” Most of Wall Street agrees on Amazon’s invincibility.

Apple is Warren Buffett’s newest big stock, a pronounced move into the magical world of elegant technology. Galloway underscores Apple’s beauty as a luxury brand, comparing ownership of an iPhone to driving a Porsche automobile. “Apple,” he writes, “is the first technology company to have a shot at multigenerational success.” It controls 14.5% of the smartphone market, but captures 80% of global smartphone profits.  Its special nature is to have an iconic founder (Steve Jobs was to Apple what Jeff Bezos is to Amazon). Add in global reach, a premium price and vertical integration and you have one of the most desirable common stocks that exist today. Much of Wall Street believes Apple shares are rationally priced as compared to the extraordinary premium involved in Amazon shares today.

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Article Credit: Forbes

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