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09.10.2020 by David M. Smith

Are the FAANGM Companies Tech Companies?

Many news outlets are using the acronym, FAANGM to describe the big "technology" stocks. It stands for Facebook, Amazon, Apple, Netflix, Google, and Microsoft. But these are not all tech stocks and represent a broader spectrum of the economy. Out of this group, only Microsoft and Apple are listed in the Information Technology sector of the S&P 500 Index. Amazon is a member of the Consumer Discretionary sector and Facebook, Netflix, and Google are part of the Communication Services sector. Wikipedia

No one would argue the FAANGM companies heavily use technology. In fact, many of them are leveraging technology to deliver a better experience for clients and grow market share. This is historically what companies have done. In the late '70s, Home Box Office (HBO – now owned by AT&T), was the first operating subscription television service offered on cable and satellite. It was a communication services/entertainment company leveraging new technologies and now competes with Netflix in streaming and creating content. Wikipedia

Deere & Company, the maker of the iconic green John Deere tractor is listed in the S&P 500 Industrials sector. Deere is taking advantage of computer vision and machine learning and equipping tractors with cameras to identify plants from weeds. Only the weeds will be targeted for doses of herbicide reducing usage by up to 90%. Deere & Co., will not be moved to the technology sector for this innovation but may distance itself from competitors in the Industrials sector. HBS.edu

Tesla is not currently part of the S&P 500 but if it is added surely it will be part of the Consumer Discretionary/Automobile Manufacturers sector. Yet, Tesla is leveraging advanced computer software, solar panels, and battery technologies to create a cleaner, more modern automobile. Tesla.com

Technology is being used across many business sectors to increase efficiency and offer more value to clients but they are not pure technology companies and should not be identified as such. The last example I offer is RSWA. We use trading software to trade and monitor holdings, offer e-signature for signing documents, and use video calling for meetings. RSWA also has a website, blog, an RSWA app in the Apple and Google stores, and a secure client portal. We are leveraging technology to offer the best client experience we can. We are clearly in the category of the financial services sector – though if we had our choice, we would want to be in the "Providing Peace of Mind" sector. 😊 RSWA Technology

Vaccine Update: This week AstraZeneca suspended the Phase 3 trial of their vaccine because a patient in the trial came down with an illness. They will study the results to see if it was due to the vaccine or not. There are approximately 170 COVID-19 vaccines in development and 8-9 are in Phase 3 trials and we believe full economic recovery will not occur until a viable vaccine is widely available. Reuters  WSJ

August Jobs Report Surprises on the Upside: Employers added 1.4 million jobs in August as the unemployment rate fell from 10.2% to 8.4%. The jobless rate was near 15% in April. The number was much better than many economists expected though any easy job gains may be behind us. WSJ Bloomberg

Interview With Jerome Powell: In an interview that spanned many topics, the Fed Chair stated masks and social distancing are essential for economic gains, why inflation remains low, that short-term rates will be low for a long time and it will take a long time to bring back all the jobs lost. He comes across as smart, well-spoken, and keenly aware of the biggest challenges facing our economy. NPR

Quick Hits:
  • Great insights by Tom Friedman regarding the Israel-UAE deal "A Geopolitical Earthquake Just Hit the Mideast:" NYT
  • Friday evening is now "Takeout Friday" for many: Wash Post
  • Improve your home Wi-Fi: NYT
  • LSD may be making a comeback for use in micro-dosing to combat pain: New Atlas
  • Not going to the gym? Here are some home workouts: NerdFitness CNET WSJ
  • How to reduce eye strain when you are always staring at computer screens: WSJ
  • The Vatican endorsed the cult movie "The Blues Brothers." It's about time. Reuters

Missing Europe? Many are dreaming of the day they can get back to traveling. Maybe now is the time to start planning for next year. How about picking olives in the Puglia region of Italy or taking a trip from Amsterdam to Venice? For those who can't wait, maybe a trip to local U.S. cities that feel like Europe will do for now. WSJ  Rick Steves  Smithsonian

Remembering September 11, 2001: We are almost two decades removed from 9/11 but many of us remember it as if it were yesterday. My whole career has been in financial services and I visited the World Trade Centers for business on a number of occasions. Last year, I visited the Memorial while in NYC. It is well done and moving and I highly recommend visiting. 911memorial.org   YouTube

The Inscription at the NYC 9/11 Memorial: On the wall near the repository containing about 8,000 unidentified human remains from the attack "No Day Shall Erase You From the Memory of Time." Virgil

 

Thank you for reading The Friday Buzz. Feedback is welcomed and please forward it to anyone who may enjoy the articles. Be well, take care, and stay safe!

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