Level’s Mike Angelucci, CFP® returns to WBEN’s A New Morning to talk about a case of Wall Street whiplash: one day after the post-election rally, a sharp sell-off in tech stocks pushed the Nasdaq into correction territory. (Starts at the 1:45 mark).
Mike explains that worries about AI stocks being overpriced have been building for months, especially around the enormous amounts companies are spending to build data centers. Election results that could slow that build-out gave investors a reason to rethink their positions, and once selling started it cascaded. Unlike past dips, buyers didn’t step in to slow it down, and much of the selling came from individual investors who had held winning tech stocks for a long time and decided it was time to take profits. As Mike puts it, all it takes is one thing to start the avalanche.
Is this a bubble popping? Mike prefers the term correction, and sees a possible silver lining: the revenue needed to support the debt companies are taking on for data centers is staggering, so a pullback now could help prevent a bigger problem down the road. Looking ahead, he notes that the fundamentals are still solid, with good corporate earnings and lower household debt than in many years. For investors who are well diversified and not concentrated in tech, he says days like this are part of the price of long-term investing, and his message to clients is to treat their stock allocation as money they won’t need for at least 10 years.
