Overvalued Stocks Fall Hard on Little News

Major indexes all end the session lower as investors flee overvalued stock and rush to safety.

Mar 24, 2014 at 9:00PM
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With weak economic data coming from China and for the U.S., the major indexes here at home moved lower today. The Dow Jones Industrial Average (DJINDICES:^DJI) lost 26 points, or 0.16%, while the S&P 500 fell 0.49% and the Nasdaq dropped 1.18%.

Throughout the market today, highly valued growth stocks were tumbling for no apparent reason. Shares of Facebook slid by 4.67%, Twitter by 4.22%, TripAdvisor by 3.87%, and Chipotle Mexican Grill by 3.69%. Other highfliers fell based on actual news, but the moves still seemed irrational. Shares of Yahoo! (NASDAQ:YHOO), for one, fell 3.32%, and with the recent announcement that Alibaba, the Chinese version on Amazon.com, is preparing to go public, it may be that investors are concerned about Yahoo!'s future growth. The Alibaba investment has been bolstering Yahoo!'s stock price the past few months, but now that the end is in site for this catalyst, figuring out what's going to drive the stock higher is a difficult assignment.

While the highfliers were having a rough go of it today, one well-respected and stable dividend-paying stock led the way higher. Shares of Procter & Gamble (NYSE:PG) rose 1.82%, making it the Dow's best-performing stock of the day and only one of two components up more than 1% when the closing bell rang. (The other was JPMorgan Chase, up 1.5%.) When uncertainty rises, investors flock to the best of breed. Not only does Procter & Gamble have a history of being a strong and stable company, but it's also a dividend aristocrat and has proved that the business can grow even during tough economic times.

One big loser today that had a decent reason for tanking was Tiffany (NYSE:TIF). Goldman Sachs removed the jeweler from its "conviction buy" list and slapped a $100 price target on the stock, saying Tiffany's growth thesis is playing out slower than expected. Investors should remember that analysts' timelines are typically much faster than they should be, so it's wise to take this downgrade with a grain of salt. Consider, too, that Goldman still has a "buy" rating on the stock, with a price target that represents an upside value 14.5% higher than where shares closed today.  

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Matt Thalman owns shares of Amazon.com, Facebook, JPMorgan Chase, and Procter & Gamble. The Motley Fool recommends Amazon.com, Chipotle Mexican Grill, Facebook, Goldman Sachs, Procter & Gamble, TripAdvisor, Twitter, and Yahoo! and owns shares of Amazon.com, Chipotle Mexican Grill, Facebook, and JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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