Over the last month: VTSAX is down 9%, AMZN (hardest-hit Big 5) is down 16%, BTC is down 34%.

Netflix is down 35%, not sure why Google would be seen as the hardest-hit FAANG.

The dirty secret of "FAANG" is that Netflix is not a FAANG company anymore despite literally being the N of the acronym.

The idea behind FAANG was to create a catchy acronym for "high-growth, big-cap tech stock". At the time, maybe it made sense to stick Netflix in the acronym - but their business model was also radically different than it is now. It also wasn't really sustainable: Facebook, Apple, Amazon, and Google all own their "moats[0]", Netflix is just a middle-man that licenses content.

The FAANG business model is all about creating your own sovereign territory on the Internet through capex and licensing. You spend a lot of money building out the best tech platform possible, and then license that out to as many people as possible so you can take 30%[1] off of the top of every transaction ever. This also implies being "cynically inclusive": trying to onboard anyone and everyone, regardless of their absolute economic value as a customer or the company's ability to support them. 30% of pennies adds up across billions of individual publishers.

Netflix does not do this, never have, and never will. They only license premium video content, which means they're exclusively working with people who actually have negotiating leverage. Furthermore, the people selling that content are better-capitalized than Netflix and can afford to just DIY/self-host their own streaming service. Thus, their business model is less like YouTube, and more like Comcast. The amount of profit Netflix can make off of premium content is far lower than FAANG companies make off of the "30% of pennies" model. That's also why they moved into content production - owning the shows is more valuable than owning the screens they are showed on.

Counting Netflix as a FAANG makes absolutely no sense and we should just pretend the N stands for, oh... I dunno. Does Alphabet own an "N" company yet? Is there any other platform owner out there that has an "n" somewhere in their name?

[0] A tech company euphemism for a monopoly. Amazon likes to call it a "flywheel". Other companies use the phrase "stickiness".

[1] A lot has been made of "the 30%", especially in the context of Epic v. Apple. In my opinion, the problem is not the fact that the cut is 30%, or even that it exists at all; it's just a convenient shorthand for market power gained from owning the platform.

> Counting Netflix as a FAANG makes absolutely no sense and we should just pretend the N stands for, oh... I dunno.

I always mentally treat the 'N' as standing for Microsoft. The letter isn't right, but FAAMG isn't as easy to pronounce as FAANG...

NadellaSoft

My bad, didn't check Netflix. It's not "really" part of FANG in my head, I suppose. Edited my comment to say "Big 5" instead.

> It's not "really" part of FANG in my head

What do you thought the "N" stood for or you thought it was a placeholder so that acronym is not offensive.

He made a GAAF, no need to read anything into it.

Big Tech stocks have changed since FANG/FAANG was coined, the term doesn't necessarily relate to what was big and heading for explosive growth back then. "FAANG" is a noun that doesn't necessarily mean "Facebook Amazon Apple Netflix Google" any more

> He made a GAAF, no need to read anything into it.

But did not say they were wrong and Netflix was actually the same as Bitcoin.

They edited it to another group to prove their point.

Which to be honest confirms the original implication, they are picking and choosing for politics.

OP point is clear to me, everyone can trash talk Bitcoin from twitter rote, but no one is actually thinking. How does it relate to the US equity market? The top comments are currently very uninspiring.

Certainly is clear, big tech stocks are falling, not as much as crypto, and that probably has something to do with big tech stocks have fundamental value.

Well sure, the N literally stands for netflix. But semantically, it's often used as "the big tech companies". At least that what it means in my head. And that's Apple, Microsoft, (gap), Google, Amazon, (gap), Telsa, Facebook, at least by market cap. Netflix isn't anywhere close.

What's the catalyst for all this? Did it start with Netflix?

Rates are going up, so stocks are being cashed out to be invested in better yielding bonds

What rate are you getting on bonds today?

What did you get last month?

I want to push the cause further back. The problem is not that rates are going up, the problem is that rates were close to zero for so long,

Personally I sold all my crypto after reading Grantham's thing on Friday. https://news.ycombinator.com/item?id=30036797

Fed rate policy

Yup - there are other factors that affect what investors think of tech stocks and crypto, but they are also on the riskier end of the spectrum, so when the general market sentiment swings, they swing too, and to a greater degree.

Yeah but then look over the past year.

The S&P 500 is down about 9% off its high from a month or two ago. BTC just crossed under half of it's peak.

It's true that's not captured in the headline, but this is a newsworthy crypto crash. It's not the first or the worst, but it's worth covering.

It's very standard for bitcoin and won't be going away for a while as the asset is still realizing its value across all global liquidity. It's scary and why the SEC dragging their feet on a spot ETF approval i.e. an investment vehicle that a non-crypto fanboy can use (yours truly) is criminal.

Yes, it’s truly criminal that the SEC hasn’t approved more ways for speculation in cryptocurrency. It’s not as if an Average Joe can just go out and buy cryptocurrency or something. Can you imagine what the market volatility would be if cryptocurrency proponents were allowed to convince naïve people to invest their money, too?

a SEC approved spot ETF is needed for institutional access, not retail. Several countries have already approved such vehicles, and nobody imploded.

Retail is already all the way in. Institutions have mandates that restrict them to trading venues, types of instruments, jurisdictions (some can only invest domestically, and so cannot use foreign ETFs), and so on and so on.

There is a reason why MSTR was able to raise mountains of debt to buy Bitcoin.

It's all institutional money.

also, DeFi leverage is not censorable by the SEC

Not really sure I follow you. You can log into Coinbase, a publicly traded company, create an account with your FDIC-insured bank account and buy crypto in ~5 minutes.

GBTC exists and seems to be tracking BTC's price successfully.

The main reason behind that is tether and its price manipulation.

It depends on the base rates. BTC has a 66% volatility while S&P 500 doesn't. One should expect such crashes with BTC.

US equity doesn't pretend to be a low risk investment vehicle resistant to inflation worries.

Except it does

How?

It's common financial advice if you invest in the US equity market index you will get a 7% return a year

Over long periods, on average, historically - no one is saying you will always get that in any given year.

Same with crypto. We have 10 years of data so far.

What? The losses of 2008 were recovered from a few years later.

It historically has grown reliably overall at the market level, but individual equities are not that at all. BTC specifically was supposed to be that, and it isn't.

There is no cryptocurrency in the top 10 pretending to be low-risk. There are probably way more financial advisors claiming that US equity is low-risk than there are people claiming the same for any cryptocurrency.

Neither does crypto. Out of all things that's about the least "low risk" I've seen yet.

Store of value.

US money printer.

Inflation hedge.

Do you think we forget what the crypto-bros said just a few months ago?

Bitcoin isn't pretending to be any of those (which is essentially what the claim is). Do you see any of that on bitcoin.org, anywhere in Bitcoin Core, or in the Bitcoin Whitepaper? Or in any of the top cryptoassets by market cap?

Don't conflate people talking about something with the thing itself.

> Don't conflate people talking about something with the thing itself.

Bitcoin doesn't have a HN account. Listening to people talk about it is the only way to get information about it.

Bitcoin proponents have been semi-continuously yammering about all of those for over a decade. If anyone seriously disagreed, there'd be a disclaimer on bitcoin.org.

None of those necessarily imply low risk / volatility, and on the long term chart crypto has satisfied all 3

You can't be a store of value if your value drops randomly.

You especially can't be an inflation hedge if you drop while inflation goes up.

Although obviously not as dramatic as crypto, gold has had huge drops and multi year bear markets, but it's still considered an inflation hedge. The housing market has had huge dips too.

Neither is as volatile as crypto, but my point is no asset has a guarantee that its value won't "drop randomly", simply not possible. Inflation was positive during the real estate crash of '08 and during multiple gold bear markets. If your time horizon is long enough, a volatile asset can still be a good inflation hedge.

2008 was a period of deflation. Of course inflation hedges would drop, when inflation was negative.

Oil, housing, car prices all dropped at that time. Prices dropped so low that companies like General Motors went bankrupt.

-------

We face an opposite problem today. Prices are going up. Old established companies love this, they can sell their stuff at higher prices. Aka, inflation. Turns out crypto was terrible at hedging this scenario.

You're right I stand corrected on '08, but if look at the 6m chart on a real estate index now it also seems like a bad inflation hedge. On the flip side, if you looked at crypto or real estate in November they seemed like amazing inflation hedges.

Most assets have tanked in the last couple months, so it's sort of misleading to single out crypto.

did you just said that crypto pretends to be a low risk investment?

The US equity market is behaving predictably. Assets were overvalued per their fundamentals and Fed actions are being taken to cool them off. A correction was widely predicted as is the eventual recovery. Crypto is meant to be immune to these effects yet it had an even more dramatic reaction than traditional equities. And while it's recovery seems likely there's still no fundamentals on which you can hang your hat and say what will drive it. It could keep dropping, it could stay flat, it could hit $100k and there's nothing you can point to as evidence it will do any of those.

Is Bitcoin a currency or an equity? I forget.

It's a commodity

'commodity' okay. Show me one legitimate use case for btc without converting it into a real currency

I looked at my 401k and it wasn't pretty.

Are you making leveraged trades in a retirement account? It's off 9%. If someone told you you'd have to make do with only 91% of your planned income, you'd be OK. This is what markets do.

I won't touch leverage with a 10 foot pole. With that being said, 9% is a lot depending on how much you have in the account.

It's annoying, but it doesn't matter too much unless you're retiring soon.

I suspect it will drop another 20% though, back to mid 2020 levels. Fed will start to intervene if it goes beyond that, too many votes. Its like house prices in the UK, the government won't allow them to drop.

I am paying my daughter's college tuition from a 529 plan, so this affects me even though I am not retiring soon.

Tough love: if you are currently making needed payments out of an account invested primarily in volatile assets, you have invested it incorrectly. More likely you left the 529 money in stocks because it's a tax shelter, not because you were actually setting that money aside for tuition.

It's the same point above: this is what markets do. Investment strategies are risk management strategies. You can't just dump money into whatever is going up right now and then complain when it goes down.

> Tough love: if you are currently making needed payments out of an account invested primarily in volatile assets, you have invested it incorrectly. More likely you left the 529 money in stocks because it's a tax shelter, not because you were actually setting that money aside for tuition.

Not exactly, so I'm not down 9% in my 529. I set target dates and my financial institution has shifted them to more stable assets based on that. I just checked and it's only 19% stocks.

As an aside, using a 529 for a tax shelter wouldn't work very well because of the penalties incurred if it is not used for education. 100% of the funds I have saved here are for tuition purposes -- I started doing this years before we had children.

> I won't touch leverage with a 10 foot pole.

But with a long enough pole and a firm-enough place to stand, you could move the world! <ducks>

Archimedes investment strategies?

9% is a blip on the radar after years of record growth.

Thoughts on a TMF and UPRO portfolio? Better sharpe ratio than 60/40 stocks index

Both of those are leveraged and unsuitable for buy and hold. Even TLT trades like a stock and not a cash equivalent. Maybe you're a better trader than me but I would not do that mix unless I was in and out of the market every day.

This has been discussed ad nauseam on Bogleheads forum and on several subreddits /r/letf /r/hfea