Did You Notice This Bear Market?

The market is re-rating high-flying technology shares.

Apr 7, 2014 at 10:15AM

The S&P 500 and the narrower Dow Jones Industrial Average (DJINDICES:^DJI) were down 0.10% and 0.17%, respectively as of 10:15 a.m. EDT Monday. Investors today will be paying particular attention to technology stocks and momentum favorites, which were hard hit on Friday (the Nasdaq Composite lost 2.6%).


Friday's sell-off in technology shares was not unprecedented and appears to be part of a broad, ongoing reassessment of high-flying issues. Among the sectors paying the highest price is biotechnology -- the Nasdaq Biotechnology Index dropped 4.1% on Friday and is down more than 17% from its Feb. 25 high. However, the correction isn't contained there, with 44% of the stocks in the Nasdaq Composite (NASDAQINDEX:^IXIC) at least 20% below their 52-week high as of Friday's close.

Granted, many of them are small-cap names you've never heard of, but some are familiar names such as Facebook and NetflixTesla Motors, meanwhile, is barely above the cutoff. Not surprisingly, those three names were among the best-performing stocks in 2013 (in fact, Tesla Motors remains one of the best-performing stocks year to date), hitting valuations that have had value-tethered investors (such as myself) shaking their heads in disbelief. I have no problem with venture capital-style, aim-for-the-bleachers investing, as long as investors understand that, for any specific name, it is closer to speculating than investing. (If this is not clear, please refer to Ben Graham's definition of an "investment operation.") The current correction suggests that momentum "investors" are withdrawing from these names; that fundamental investors are becoming more realistic in their assessment of the risks involved; or, more likely, a combination of both of these -- this is a healthy development.

In terms of macroeconomic news, investors and pundits are looking forward to the release Wednesday of the minutes from the Federal Reserve's March meeting. The market was initially spooked by what it perceived to be Janet Yellen's hawkish tone at her first press conference as Fed chief last month, but she has since made an effort to convince investors that the central bank is committed to providing monetary stimulus to support the recovery. Finally, the first-quarter earnings season gets under way this week, with banks JPMorgan Chase and Wells Fargo reporting results on Friday.

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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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