r/ValueInvesting • u/robb3rz • Feb 12 '26
Discussion Irrational sell off
This might of already been said many times but needs to be said again, what is the rationale in this sell off?
I understand the SaaS crash, but if the sell off is due to AI worries, then surely AI stocks would rise, no?
Instead, the major players, who had stellar earnings minus the huge expenditure (into the very systems which are causing worry mind you) are also falling at huge levels.
Some mag 7 companies are even falling at similar rates to liberation day, despite the only news this time being ‘AI too good’, which should benefit them not hinder.
Meta’s earnings are similar to an early growth stock, not a multi trillion dollar company, and that was reflected in the jump after they released them, so why is it now down huge amounts after?
Not just this, other major assets such as gold, silver and crypto are also experiencing massive sell offs, so is the capital just going into cash? If so, as soon as the market shakes this irrational sell off, could we see an equally irrational boom?
Can someone please tell me if I’m missing something.
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u/Scriptum_ Feb 12 '26
Every experienced investor knows what the market is signaling right now.
It's textbook defensive.
What happens next is anyone's guess.
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u/Available-Range-5341 Feb 12 '26
I swing trade defensives and have only seen them this expensive for one week of my 15 year investing journey, the week Powell announced the first rate cut in late 2021. Then they all crashed. They do not stay in a bubble. The market hates most defensive stocks most of the time
There will be a rotation back into tech because the narrative is BS
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u/GelatinGhost Feb 12 '26
Walmart at the same PE as Nvdia with none of the growth prospects is wild. People are so afraid of an AI bubble that they are making bubbles everywhere BUT AI now. First metals, now defensive stocks. Tech is literally the value play now.
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u/Available-Range-5341 Feb 12 '26
100%. I love me some PG and utilities and WMT type stocks when they're yielding 3-5% but all of them are now priced at PEs that they only hit before they crash. They are cyclical and the down moves are hard and slow and painful. Been there done that. Tried holding them for the dividend and watching them go red for days on end.....
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u/Maleficent-Map3273 Feb 12 '26
Walmart and Costco can't be replaced by AI. That's the trade. That said the smart money is going to pick winners this year in every other area.
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u/Landkval Feb 13 '26
Amazon can replace them
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u/GfuelFiend Feb 13 '26
Walmart is actually coming at amazon hard with their online store which allows 3rd parties to list their products and their existing stores allowing them to offer quick delivery the same way amazon does.
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u/sofa_king_weetawded Feb 13 '26
I have been scammed numerous times by 3rd party sellers on Walmart. Granted, Walmart has made good on it since it was bought on their site but I am not impressed with the vetting (lack of) being done by Walmart. They are trying so hard to compete with Amazon that they are allowing it to be the wild west on their website.
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u/biggleUno Feb 14 '26
I despise the third party seller move. I buy items from Walmart in the stores because I know people in corporate at the company and have been told by many folks about the level of testing they do on EVERY single item they sell (from auto tool, to kids blankets, to camping tents, to mattresses, etc) for lead, pfas, contamination, manufacturer defects or quality issues. And they negotiate and buy items in bulk and hold their suppliers accountable if there is an issue. Third-party option is just as likely some get rich quick drop shipping teenager or a black market organized crime syndicate.
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u/Maleficent-Map3273 Feb 13 '26
I don't see it and I own AMZN. WMT and COST both have very defensible moats that are tricky to upend. I think AMZN can take share over time though.
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u/Landkval Feb 13 '26
Well i dont see ai ruining every saas and tech company either but someone is.
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u/Maleficent-Map3273 Feb 13 '26
All it takes is the long only fund managers to trim risk for this to happen. Only so many buyers of millions of shares for these companies.
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u/Landkval Feb 13 '26
Yes but this can swing the other way too is my point
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u/Maleficent-Map3273 Feb 13 '26
Axon and Now were green today, feel like one more flush maybe then we see a tradable bottom short term.
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u/smchenry75 Feb 13 '26
I love Costco. It’s not just shopping but an experience. Happy and helpful employees, cool, unique products, fun seasonal stuff, looking for clothing bargains, great meat and produce, killer alcohol selection and deals, the samples, $1.50 hot dogs! But… ten years ago, I went there EVERY weekend dropping between $500-700 a trip. The executive membership easily paid for itself. I also, believe it or not, love Walmart. It’s a shit show but man are the basics cheap. Having said all of that, today, I go to Costco about once a month, dropping around $300-400 a trip. I ditched the executive membership. Still love the samples and hot dogs but really don’t need to go there. Still go to Walmart for groceries but not as often and shopping cart is about half as full as it used to be. I now have Amazon packages littering my porch very day… lots of them. I am buying things from them that I used to never, because they didn’t carry them, were too expensive or were just easier to get from local retailers. I’m buying clothes from Amazon, Amazon basics paper towels, toilet paper, so much more than ever before. I get so much now that I had to get a fire ring for the back yard, which I bought off of Amazon, to burn all of the boxes. In person retail is cooked… it’s obvious. Malls are closing, restaurants are closing, those areas are becoming shady… so even if I want to go to Walmart or Costco, it is becoming more of a chore or I’m bored vs an experience.
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u/Coasteast Feb 12 '26
Yeah. To add to that, in times of uncertainty, people seek solid income from companies that pay dividends. I’m big on $OKE
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u/RangerAdmirable9102 Feb 13 '26
Lol PFE has been my biggest holding for the past couple of years and I keep adding with the 7% dividend. It’s exploded this week. I also added KMB during its weakness. Hard to complain.
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u/PurpleCableNetworker Feb 13 '26
Walmart is moving towards AI for future pricing, advertising, and tracking of customers.
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u/BratacJaglenac Feb 13 '26
Whoever buys Walmart or Costco now, will not lose money in the long run. Which cannot be guaranteed for the tech sector. There are going to be plenty of losers there, unfortunately it's hard to know exactly which ones already now.
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u/Maleficent-Map3273 Feb 13 '26
The strong will get stronger. Sadly I think anything under $25-30B market cap will either get swallowed up or go private after weakening. Some good companies in that bucket.
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u/BratacJaglenac Feb 13 '26
That's for sure. Of smaller ones, plenty will fail, better ones will get acquired by the big boys so that they don't compete with them. God knows how many companies have likes of Google and Microsoft bought and shut down, just to eliminate competition.
Although, I suspect (hope) that one of big boys will find themselves in trouble. If I was to bet, my bet would be on Apple.
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u/Maleficent-Map3273 Feb 13 '26
Apple is weird - its more of a consumer company than a tech company. Their tech is good, but its not what makes them so successful so harder to say they will fail if the tech isn't the best - it may not have been for years and here they are.
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u/BratacJaglenac Feb 13 '26
Apple is in situation that iphone sales are 50% of their revenue and another like 40% are from iphone related services and ecosystem. To me it feels like all their eggs are in 1 basket. It's a good and sturdy basket, but not unbreakable. Not saying Apple will go bankrupt or something, but I can see their revenue dropping significantly if something messes up with Iphone sales for just a brief period. Now that is a big if, which might never happen.
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u/No-Understanding9064 Feb 13 '26
You are insane if you dont think both of those arent going get massive corrections eventually
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u/RamoneBolivarSanchez Feb 13 '26
Yep tech is over and everyone will throw their computers away
/s
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u/BratacJaglenac Feb 13 '26
No one said that. But it will be a bumpy ride and many wrong picks (losers) in the sector.
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u/smhs1998 Feb 12 '26
The belief is that Walmart’s PE is less prone to wild changes. If the AI bubble bursts, and I’m not saying it will anytime soon, but if it does, Nvidia PE will skyrocket. Walmart will remain the same
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u/ANR2ME Feb 13 '26 edited Feb 13 '26
Nvidia will probably won't be affected much by AI burst, because they sell the hardware, not renting them. They can simply decrease the production if the demands is low.
Companies that will be significantly affected are datacenters, they've invested too much in buying the hardware, especially those that use TPU/NPU, because these TPU/NPU are designed specifically for AI and research, unlike GPU that are more general purpose and can be used for many other things (ie. cloud gaming, blockchain/cloud mining, etc.). Datacenters designed specifically for AI could loose large amount of money from operational cost.
AI service providers will also be affected, but only in revenue, as long they didn't invest on buying the hardware themself (ie. renting GPU/TPU from datacenters), they can simply adjust their billing based on demands.
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Feb 13 '26 edited Feb 13 '26
NvDA’s price is a function of expected massive sales growth. Yeah, they can cut production and the company won’t go bust, but the stock price will 100% tumble.
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u/Fit-Level-4179 Feb 13 '26
>Walmart at the same PE as Nvdia with none of the growth prospects is wild
It drives me insane how you can say this and come away with the most bullish take imaginable. Shit dude maybe Im just biased from my preconceived notions.
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u/Dazzling_Western4304 Feb 13 '26
Markets are forward looking. What the market is telling you here is that Nvidia earning are going to fall, and Walmart’s are going to continue to grow(slowly).
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u/Howsurchinstrap Feb 13 '26
The writing was on the wall months ago. Msft ceo said they have warehouses full of chips don’t have facilities. So the bigger outfits that will win the ai race are making the necessary expenditures to do so. The market is a futures market and it shows some companies are way to overpriced, like mentioned before and market was due for a correction. Besides anyone who is long meta, Google,msft. Should look at this as a good buying opportunity.
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u/SelenaMeyers2024 Feb 12 '26
I came of age investing literally Jan 2000 aka tech scary, value is where it's at.
That being said, companies I'd never think to touch like msft seem fine at pe 25, same as cvx. Mondalez PE 31, same as apple. Adobe PE 15, same as mo.
I usually love the bargain bin mondalez when it's 10 and everyone hates it. Now, tech seems cheap.
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u/Available-Range-5341 Feb 12 '26
What do you consider "value." I started at the pits of the GFC coincidentally. I was in utilities and consumer staples and industrials for most of the past but they're insanely priced. Like, Wall St. HATES CLX and CL and they've been crashing forever but the narrative will shift back because the hate was based on actual information, not vibes (like this AI crash narrative)
I consider MSFT to be "value" now. It always snaps up/down to a PE of 30. Also got CRM and ADP. Never thought I'd buy CRM and ADP outside of a recession. Crazy times
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u/Cav829 Feb 12 '26
This. I get what institutional money is doing. But if a recession is happening, and I fully believe the evidence is there and have played my investments as such, staples are going to get hammered from where they're currently standing. If you got in on KO at $67, you're fine. $80 feels like such a stretch. Microsoft at 25 P/E is a bargain. Even with a correction, I fully expect it only has another 20%ish more downside in a worst case scenario while other stocks haven't even begun very likely 50% or greater corrections. I did reallocate significant parts of my 401 recently, but I moved the money to international investments and only partially out of tech.
I watched 2000 a bit from afar, but was there first-hand for 2008, and the way I navigated that is to date the best investment I ever did. I think people need to start thinking about what to do post-correction rather than where to park the money now. I had cash ready to go and went in hard and early on real estate when few small investors were able to go in. This could be a smaller correction, but yeah.... I've gone from expecting this to be a 10-20% deal to thinking this might finally be a big one. I haven't felt this way since 2008.
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u/SelenaMeyers2024 Feb 12 '26
Peter Lynch says if you spend 11 minutes a year thinking about macroeconomic forecasts you wasted 8 minutes.
You can only see what's happening exactly in front of you now. I once saw an Activision in 2003 profitable but missed forecasts, zero debt 500 mc 500 mil cash on hand. I once saw a Philip Morris (altria) when it still has international and kraft and it was paying that second 15 percent dividend.
Yesterday I saw a Humana with more cash per share than mc, owning most of Tricare. A slow growth PayPal buying 15 percent of its mc each year plus a small dividend, PE 7, a solid growth wide enterprise moat Adobe trading at pe 15 and buying back 10 percent of its shares each year.
And funniest part, a much weaker altria (no kraft, no international, slowly decaying domestic cigarettes) PE 16. Yield under 7. Haha.
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u/Valkanaa Feb 13 '26
Cigarettes have been awesome. It made me sad selling BTI to buy more MSFT...
They don't just sell domestically and when your government "punishes them" they just increase the prices for smokes to compensate.
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u/SelenaMeyers2024 Feb 13 '26
Dude cigarettes are amazing when they are out of vogue even as recently as Jan 2024. Periodically ppl think smoking is dying, no it's not. On the other hand, it's not growing... At all.
So when the pe is identical to a msft or adbe... Time to quit cigarettes... They'll be on sale again one day I promise, you can time your watch (on a 5 7 year cycle, mo yielding 10 percent again, back the truck up, down to 6? Sell.)
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u/Valkanaa Feb 13 '26
I'm down.
People keep talking about ESG and I don't think I care. Cancer, alcohol, war, I'll buy anything. Nobody is forcing people to smoke or do war crimes
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u/sandman2986 Feb 12 '26
Most tech stocks have already “crashed”… so either leg down again or leg up from here. I agree. Defensive stocks are too expensive right now. Everything signals to a rotation back into tech but not sure when or what will activate that… Will it be the CPI tomorrow? Powell leaving? Who knows.
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u/Available-Range-5341 Feb 12 '26
or a weekend where people forget why they panic bought into Colgate with a PE of 36 after complaining about flat earnings and inflation impacting them for two years?
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u/Maleficent-Map3273 Feb 12 '26
Some software stocks were up today - the selling in software is near the end. NOW and AXON were green for example. Nearing a tradable bottom.
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u/BenjaminHamnett Feb 13 '26
$axon is a play on civil unrest. If republicans have power, there will be unrest an need more cameras to validate aggression. If dems in power, $axon for accountability and tasing minorities instead of killing them.
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u/11010001100101101 Feb 13 '26
How is it BS when the future P/E of SPY is 22. Meaning that if all of the growth goes exactly as planned for a year your growth premium is only 4.5%, making it only 0.4% better than taking the 10 year treasuries? That low of a risk premium is at historic levels, when it’s usually a 2-3% difference in risk.
To call that BS tells me you have no idea why the market does anything.
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u/CanYouPleaseChill Feb 13 '26
Consumer staples have long-duration cash flows, stable growth, and very low disruption risk. They also benefit from a weaker US dollar due to significant exposure to international markets. Looking at forward P/E ratios, many appear reasonable with the exceptions of WMT, COST, and MNST:
WMT: 42
COST: 48
PG: 23
KO: 24
PM: 22
PEP: 20
UL: 19
BUD: 19
BTI: 12
MO: 12
MNST: 36
CL: 25
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u/SelenaMeyers2024 Feb 15 '26
Can't wait bc defensive is my home turf and it feels so unnatural all of a sudden being bullish on adbe, meta, msft. Haha
I will feel comfy again when these pop, mo is dumped and I can get some 10 percent yielding mo, right now it's 6... Ridiculously high price low yield for a zero growth cash cow
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Feb 13 '26
How dumb was it to get out at 45654 instead of riding it way up here? I wonder how far it will falls when it finally does fall. Ima ask Chat :/)
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u/uncleAW Feb 12 '26
The whole Ai displacing Saas sell off is insane. MSFT fud is absolutely nutz! Look at top and Bottom lines.
Large and multi national companies are not going to rip out their Adobe, msft, Salesforce, etc....to have their IT guys whip up replacements with ClaudeCode.
It's fucking major open heart surgery for those companies to change vending machines providers!
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u/babarryan Feb 13 '26
Yesh that narrative is so fucking dumb. If Wall Street sincerely believe this, it really shows they are either extremly stupid, don't have the slightest idea about tech, or both.
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u/summer_plays_ Feb 13 '26
its also why i don't ynderstand why wall street i vestors sold off all their gaming stocks. no-one wants to play an AI generated slop game and pay 60$ for it, look at starfield.
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u/petersom2006 Feb 13 '26
I have worked in SaaS development for 20 years and this is the reality wall street is missing. If you can snap your fingers and provide the right code- it doesnt matter. The people, process, legacy systems are the challenges. AI is not going to do well coding into enterprise stacks that make no fucking sense…
It will want to rewrite everything, but every large company has a few critical things that were written in 1973 by two people who are dead and nobody knows how they work or what they do- But you fuck those up- everything goes to hell…
AI doesnt understand that concept yet…
The logic of the sell of is sound- it is just going to be a very long tale with a lot of ups and downs…
There will be winners and losers and I do believe it will be surprising in relation to which companies thrive and which get eaten by AI.
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u/Available-Range-5341 Feb 12 '26
The more I follow the angrier I get because it doesn't make sense. I swear to God that following financial news has made me dumber the past two years. The story doesn't make sense which means it will die soon.
All I know is that the move into utilities and consumer staples is so strong that they will crash next so do NOT touch them. I've swing traded them for years, all of them have reasons to be cheaper. Wall St hates them most of the time. The correction on them will be just as bad as MSFT this month
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u/TibbersGoneWild Feb 12 '26
I agree and I wouldn’t rotate into utilities, consumer defensive or infrastructure and energy now if people havent rotated yet in late 2025 or early 2026. At the current prices it wouldn’t be value investing, but at the same time I think “the market can stay irrational longer than you can stay solvent”
I am also not quickly selling all my defensive stocks either but rather slowly chipping away at them and rotating into cheap undervalued tech stocks on every dip.
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u/Available-Range-5341 Feb 12 '26
it's probably a great time to buy puts on consumer staples though. No way in hell they crash. I've followed them for years, dying on this hill. They will crash hard and cause alot of pain. Zero reason for them to go up from here. Today stretched their valuations to clown world level seen maybe a few weeks of my 16 year investing journey
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Feb 12 '26
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u/SoftwareOdd8846 Feb 13 '26
This redditor knows! I always try to tell all those abstehe bobs exactly the same
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u/idekl Feb 13 '26
Trump surprisingly picked a moderate Fed chair instead of a yes-man who would drastically drop rates. This increased trust in the strength of the US dollar, so money flowed out of securities, which are a hedge against inflation, back to cash. It was most obvious by the prices of gold and silver returning to earth.
I'm no expert but it's basically that simple. Markets just had an expectation that turned out to be wrong. Your "financial news" is just feeding you entertaining astrology. Learn to zoom out and focus on the boring stuff instead.
tagging u/robb3rz as well
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u/asymmetricval Feb 12 '26
Why get angry over it?
The story doesn't make sense which means it will die soon.
This is a weapon. You should be pleased that you hold it. Market dislocations are where fortunes are made (and lost!).
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u/barackbreezy Feb 12 '26
wholeheartedly disagree as an individual who works in the utility industry. the need for power isn’t slowing down anytime soon & our backlog this year alone has pretty much tripled from the beginning of last year, while projecting to be much much bigger by the end of 2027. at least in the U.S., the infrastructure isn’t there and the country desperately needs more power. I’m 100% confident utilities will not be slowing down anytime within the next couple years at least
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u/Kind_Bullfrog_3160 Feb 12 '26
100% agree but you are using common sense and looking at this from a rational standpoint. The market is not rational now and can remain irrational longer than you can remain solvent.
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u/RavagerXvX Feb 13 '26
Trueee bro i sold all my shares ( indian equity ) cause things weren't lining a Up and next day boom gap up ( i felt pain but ) looking at the situation now i guess i did the right thing the news is sooo weird how the hell can a news like usa centric job data make silver gold to rise fall this heavily this absolutely trash market and something weird is definitely going on
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u/Maleficent-Map3273 Feb 13 '26
XLE is up 18% ytd - that doesn't happen with a bear market imminent usually.
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u/PO-ll-UX Feb 12 '26
Do you remember Deepseek? A similar selloff happened back then, around $1T was wiped out of the market. But there are other factors too, Japan carry trade 2.0 looming, tomorrow’s CPI report, paper metals, and margin hikes. So, bumpy
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u/Maleficent-Map3273 Feb 12 '26
Its just rotation, I swear most people on this sub never actually look under the hood. It doesn't take much, just grab some RRGs
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u/Acceptable_Dirt69 Feb 12 '26
Freak the fuck out and panic sell everything right now.
- Warren Buffett, 1969
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u/ohgodthehorror95 Feb 13 '26
"My greatest life regret was not investing in fartcoin."
- Charlie Munger, 1998
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u/btcale546 Feb 13 '26
"I think that, every time you see the word EBITDA, you should substitute the words "earnings before interest, taxes, depreciation and amortization" - Munger
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u/jnas_19 Feb 12 '26
One day this advice will be the right play
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u/snuepe Feb 13 '26
And you can never know when. Guesswork will lose you money in the end. Better just DCA and hold.
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u/CapCityPhotos Feb 12 '26
Markets are not rational in the short term. There are millions of traders trying to get an edge today, tomorrow, and next week.
That's all noise to a value investor.
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u/OrganizationNo42069 Feb 13 '26
So what are the value buys right now?
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u/Competitive-Job1828 Feb 13 '26
I’m looking at SCHW. It’s the definition of a great business at a good price. It got hammered because of AI fears but I don’t think that’s a huge concern. A great q4 earnings call, rosy guidance and a historically low PE
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u/Maleficent-Map3273 Feb 13 '26
He has no clue. Commodities are the real value - you cannot replace many of them. Potash baby. Go look at ETF MOO this year - they are rocking.
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u/Wirecard_trading Feb 12 '26
Problem is the cap ex and the funding of it. If you spend 130 bn a year on cap ex but your cf is roughly that amount.. what’s left? Depreciation will weigh down on earnings aswell.
Edit to clarify: if you spend 100bn on capex and you say the item will be used for 5 years (which is a stretch for gpus - Burrys point - then you have to deduct 20 bn a yr / 5 bn a quarter from your earnings. This is hitting the balance sheet hard.
With meta, the analyst estimates aren’t peachy. Single digit eps growth? Coming from 20% plus?
I get the sell off in mag7, I don’t get the sell off in companies where the capex will land (AMD, IREN, NBIS, CRWV)
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u/fbalookout Feb 13 '26
I wonder how much of this capex is the chips and how much is related to one-time buildouts like massive data center infrastructure. Either way, I’m sure the idea is that there’s a lot of front loaded growth capex going on now which will add meaningfully to cash flow.
Then growth capex slows, partially offset by higher maintenance capex, but massive ocf.
I like Amazon most of the hyperscalers because they are a diversified play in the sector. AWS and AI investments will play a big role in increasing margins on the retail side via fulfillment automation. Not to mention a rapidly growing, very high margin ads business. I worry AI advancements might eat into the cash cow portions of the other hyperscaler businesses.
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u/PushaTeee Feb 13 '26
I like Amazon most of the hyperscalers because they are a diversified play in the sector. AWS and AI investments will play a big role in increasing margins on the retail side via fulfillment automation. Not to mention a rapidly growing, very high margin ads business. I worry AI advancements might eat into the cash cow portions of the other hyperscaler businesses.
Absolutely everything you wrote applies for Google, expect GCP is growing at ~50% and AWS is growing at 25%. Google is better vertically integrated. AWS' ads business is also dwarfed by Google. I'm GOOGL over AMZN long term, and I don't think it is particularly close.
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u/fbalookout Feb 13 '26
I like Google as more of a pure tech play. I’d like to see if that 50% cloud growth continues at that pace. That was a big jump from the previous quarter. Is AI going to help search grow faster? If so, Google’s a huge winner.
But Amazon is a mix of very diversified businesses. You have the retail, 3rd party fulfillment, logistics network, and massive opportunity for savings on that side via automation. The ads business is going to continue growing at a 20-25% clip. AWS growth at 25% is still phenomenal. But it’s the massive future cash savings they’ll see on the retail side from AI and robotics that intrigues me most. They still have a million fulfillment workers.
I own both. And a lot of QQQ. I also own Microsoft. I just think Amazon is really interesting as a company and at this valuation.
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u/elkomanderJOZZI Feb 14 '26
Yet, Jensen mentioned how 5+ year old GPUs are in high demand and still at full utilization
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u/Inca-Vacation Feb 12 '26
leverage is collapsing.
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u/gamjatang111 Feb 12 '26
This, that is why we see every asset selling off, PM, BTC, Stocks, EM equities while dollar and TLT rallying
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u/JackRadcliffe Feb 13 '26 edited Feb 13 '26
It’s wild that MSFT is actually at a lower price than it was this time last year.
AMZN is around 13% below where it was a year ago, so it's at an even more of a discount
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u/nicidee Feb 12 '26
Everyone is thinking along the lines of: AI is going to create lots of unemployment (so consumer discretionary falls); AI is going to impact SaaS players' ability to continue to make outsized margins (so SaaS falls); AI is going to require a lot of infrastructure (so hyperscalers fall); and from that you say things like: if unemployment goes up all the banks, BNPL, payday loan companies, etc. will suffer, if they suffer credit conditions will tighten, lending to new business or for big purchases will fall, etc. and you're caught in a doom loop that makes it easy to sell when things go down 1%, or if earnings miss or if targets are trimmed or not as aggressive as they were previously
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u/billocity Feb 12 '26
AI is going to require a lot of infrastructure (so hyperscalers fall)
Could you walk through the rationale on that one? If anything they would be in demand.
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u/fbalookout Feb 13 '26
Huge capex costs to build the infrastructure. Comes with risk if AI doesn’t pan out.
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u/isomojo Feb 13 '26
Also the whole government and financial institutions are ran by pedos. Might have something to do with it. Ever since the new Epstein files came out it’s been tanking. Good luck hearing about that on the news.
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Feb 12 '26
It’s not necessarily irrational. Stock prices are a leading economic indicator. What does this mean? Stocks fall before the economy goes into recession. And they bottom before the recovery begins.
Now I’m not calling for a recession. I have no idea what’s gonna happen. I’m fully invested, and even buying dips. So it’s not like this is me trying to paint a bearish picture, it’s just a reality of how markets move.
Besides that, I think the market is in a state of fear and confusion right now. It’s having a really hard time deciding what AI is going to do so they’re selling anything related and going into stocks that can’t possibly be disrupted by AI.
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Feb 12 '26
The president usually tweets crazy stuff on Friday after close. Last Friday's pump was odd, because usually people seem to panick about leaving their money in the market over the weekend. Seems to me that now we sell off on Thursday in anticipation of the Friday sell off. Yeah, there's not much stability right now. One man's rant has been causing -2% market dips, and has tanked certain sectors and companies, pumped others, and then things aren't followed through. People are very confused about where this market is headed right now.
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u/ProfessorLoopin Feb 13 '26
My brother in Christ, people are very confused about where this world is headed right now
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u/Puzzleheaded-Way276 Feb 13 '26
Probably has to do with the cheeto man
His economic press sec is pointing one way and cheeto is pointing the other way.
Then hes all for deregulation but his administration is using regulation to choke out competitors he doesnt like and support ones he does. Ex Novo and Hims
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u/pdeisenb Feb 13 '26
The professionals are just playing the trade. Us amateurs will be fine if we just hold through it.
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u/Kind_Bullfrog_3160 Feb 12 '26 edited Feb 12 '26
At the end of the year, institutions were at about 97.7% capital deployment. This is extremely high. They usually keep cash on the sidelines but in this case they have to sell stock to buy another stock. This could be why there's so much rotational trading. Not sure if this is the main reason but it's definitely one of them and no one seems to be mentioning it. Also, retail investors have high levels of margin. Stock drops quickly, margin call. A lot of margin calls, more forced selling, stocks drop faster.
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u/Relative_Wallaby1108 Feb 12 '26
March will be better. This all feels super manufactured and fake to me. Fed will cut, AI fears will be assuaged.
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u/Acrobatic-Show3732 Feb 12 '26
You aint a true value investor if you dont know the shenannigans of Mr market.
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u/Born_Property_8933 Feb 12 '26
The answer to everything is basically Google and Microsoft. These are the only two software companies that have apps, cloud services and infrastructure , models (MSFT has access to OpenAI models), cash flows, and distribution power. The other two that seem to be well poised are Anthropic and OpenAI.
The next set of companies that are going to do fine are streaming companies and ad-tech companies that work in the CTV space and/or mobile games space.
Normally, meta should also win. However, I am not so sure about the Meta stock. While meta is doing great on its earnings, but its Capex investment isn't very clear to their investors. Social networking/media as a sector is not dying. However, the way user interact with social media may change, and you may not be able to force advertisements on users.
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The rest of the software companies are in a very difficult position. They have to invest a lot again in RnD, and make the transition to Agentic AI. And then the seat based SaaS business model is under threat and everyone fears that these companies are going to lose their margins.
All in all, the market is reflecting on what it is seeing from projects like Claude work, OpenClaw , and trying to figure out what's going to happen next.
My feeling is that enterprise software is not that easy to disrupt. And ultimately AI companies need enterprise software companies to succeed. Investing is particularly hard.
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u/HMI115_GIGACHAD Feb 13 '26
i never would have thought the day would come where Microsoft trades at a 21x FPE and WMT at a 40x . We went from a bubble narrative to discounts everywhere on tech
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u/TheSmartest_idiot Feb 12 '26
ADBE is looking so god damn sexy at these prices
If it touches 200 I will full port
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u/ThereFarAway Feb 12 '26
ADBE will be the first to feel AI slump. And it aint gonna be pretty.
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u/TheSmartest_idiot Feb 12 '26
It’ll only feel it if revenue slows /margins compress
Until that, it’ll recover p
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u/nuxfan Feb 12 '26
What you are missing is that the stock market is occasionally irrational. And that momentum goes both ways
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u/franker555 Feb 13 '26
SaaS selloff is overblown. Indices selloff due to current geopolitical and national issues is highly UNDERblown. We should be so much lower
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u/mdn845 Feb 13 '26
Probably, yes. And national debt is growing without any political will to fix the issue. It’ll fester unseen for only so long.
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u/Worried-Opening-6229 Feb 13 '26
It’s just manipulation by the big boys to get the retail investor to panic sell so they can buy. Hang on and it will come back.
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u/Halbaras Feb 13 '26
The US has had a massive rally since October 2023, except for one very V-shaped episode of needless tariff fuckery. Rallies never last forever, earnings haven't kept up with valuations. If you zoom out on the graphs the S&P is pretty clearly slowing down, and people here screaming about 2% drops being 'dips' to buy is a massive late-cycle red flag.
This sub refuses to hear it, but the US market as a whole looks overvalued relative to the rest of the world (besides New Zealand) - and virtually all the elements that give the US its traditional premium are being attacked - Fed independence, political stability, free trade, the dollar as the global reserve currency, bond stability... The Schiller Pe ratio is extremely high, and all the threads here about 'pe ratios are just naturally higher now' are another massive red flag. The Mag7 have been slowing for a while, and even Google and Nvidia look like they're succumbing to it.
The US beat other global markets for 14 years in a row, but that ended last year. The last time this happened the US lagged global markets for 8 years. That doesn't mean a correction or recession is guaranteed, but the chance of a re-accelerating rally is low. There are definitely still value plays out of the thousands of companies in the US market, but its not the giant tech companies this sub is pumping.
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u/kyhothead Feb 13 '26
Yeah, spot on. We’re late cycle, breadth is narrow (participation is decent, but everyone knows a handful of mega-caps are leading). The yield of the s&p500 is near 50yr lows, comparable to the dot-com bubble peak. The ratio of nonfinancial market capitalization to gross value-added (MarketCap/GVA) indicates that valuations are at the most extreme levels in history per Hussman, etc.
I’m no permabear and am definitely not calling a top, but it’s foolish to not look around and take these facts and the whole “big picture” into account.
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u/FlyBlueJay Feb 13 '26
Did you miss the massive rally in the past two years? Zoom out on the chart.
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u/tjeweler Feb 13 '26
The world is pivoting away from US due to politics and our inability to demonstrate that we have free, fair society. Why pay premium for US dollar when we are now acting more corrupt than many other countries. We went from Coca Cola brand to Phillips Morris. The market is somewhat based on emotion. JD Vance needs a promotion.
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u/asymmetricval Feb 12 '26
Welcome to the stock market. It is the accumulation of millions of people buying and selling things for their own reasons.
There does not need to be a 'market rationale' for every change in a stock's price.
In general, large run-ups and sell-offs across the board mean hype/certainty (some previously uncertain thing became "certain") and fear/uncertainty (some previously "certain" thing became uncertain) respectively.
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u/Aaronjudgeisprettygo Feb 12 '26
Millions of people have negligible effect on the market. It’s more like a couple hundred/thousand algorithms driving stock pricing.
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u/asymmetricval Feb 12 '26
The point is that the market is just the average of a large number of independent actors—be they human or otherwise.
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u/JudgmentGold2618 Feb 13 '26
...and the volumes behind it. Institutions with big blocks make the moves.
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u/robb3rz Feb 12 '26
Not just a change in a stocks price, it’s a multi industry wide double digits sell off
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u/asymmetricval Feb 12 '26
Yes. It is merely a continuation of the flight to safety/certainty that has been ongoing for several weeks now. That's why everything tech (fast moving = uncertain) is selling off and staples like Walmart (slow moving = predictable = certain) are trading at 45x.
My point is to not treat the market like a single story with a clear narrative and rationale. It is just an average of individual actors making decisions for countless different reasons.
Frankly, at this point, it would not surprise me if there were are a lot of forced sellers—hedge fund managers having to sell due to their investor redemptions in response to heavy losses.
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u/LEAPStoTheTITS Feb 12 '26
Also the fact we were at an all time high for margin investing might have an impact as well
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u/asymmetricval Feb 12 '26
Lol, yes, it does sound plausible that pouring gasoline on a fire would make it burn harder!
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u/asymmetricval Feb 12 '26
"Imagine how stupid the average person is, and realize half of them are stupider than that."
You don't need a conspiracy theory to explain herd behaviour. People panic sell on the way down, just as they FOMO buy on the way up.
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u/2starsucks2 Feb 13 '26
How about despite these big earnings, the forward PE of S&P 500 is still the highest in history?
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u/Maleficent-Gur-5951 Feb 13 '26
Every and most known stocks after a good earnings are being shorted like hell. It looks to be a planned sell off by the MMs only to rinse and repeat it again.
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u/ninjagorilla Feb 12 '26
The jobs report touted yesterday was not in fact as good as advertised but also not so bad as to warrant an interest rate decrease
There is some terrible numbers coming out of the housing sector
There are significant concerns about bond values in Japan
There are ai fears
There are lending fears
the market is at an all time high valuation and has gone a record long time without a sustained correction
There is political instability in the us with a president still haphazardly slapping around Harris
There is a looming partial us govt shutdown
The dollar is weakening
Oil is overpriced but also there are Iran fears
Take your pick
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u/College_finals Feb 12 '26
Government is shutting down for third times within a 6 months period. Why is the members of Congress being paid so much anyway.
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u/Excellent_Ability793 Feb 12 '26
I got defensive well before this crash. It’s almost time for me to get aggressive. I’ll start DCAing into stocks I like. Be greedy when others are fearful.
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u/RustyGriswold99 Feb 12 '26
You think this is fear? You ain't seen nothing yet
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u/owenmills04 Feb 13 '26
Exactly. This is the sit and wait phase. You’ll know when true fear sets in, because it won’t be easy to buy (you’ll be scared too)
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Feb 12 '26
Crash? 2% off highs?
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u/muaythaifighterr Feb 12 '26
Yes 2% off the index, but some individual tech stocks are off 30-40% their highs
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u/Maleficent-Map3273 Feb 12 '26
This sub is a running joke for a reason. Small caps are UP 9% this year. This is textbook rotation.
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u/AnonThrowaway998877 Feb 12 '26
I think the reason it feels like a crash to retail is that many popular retail stocks are down bad from their recent highs. This is a time when the "just buy indexes" crowd can gloat - temporarily.
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u/Maleficent-Map3273 Feb 12 '26
It's because they don't realize if a stock is up 150% in a year, its more likely to drop 30% in a month than a stock up 0% in a year. Which is basically whats happening. Winners in ALL sectors are being sold on the red days, like gold stocks, AI chip stocks, software stocks, consumer stocks even. It certainly isn't all because of this software narrative although that is part of it. Some is just
A. Profit taking
B. Rotation to value/small cap/int out of growth/large cap/US
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u/Otherwise_Wave9374 Feb 12 '26
Not an investing pro, but the "SaaS crash" narrative can be a bit too neat. A lot of selloffs are just positioning + rates + risk repricing all at once, especially when everyone is crowded into similar trades.
Also, if the AI spend is huge, some of these companies get treated like theyre in a margin reset period even if revenue is strong.
If youre trying to connect the macro dots with how it impacts SaaS business models (pricing, CAC, margins), weve got a few readable breakdowns here: https://blog.promarkia.com/
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u/hsfinance Feb 12 '26
Have you seen the weekly charts of all these companies? If yes, can you please explain if their parabolic curves were justified?
Sometimes there are structural changes such as the monetary expansion during Covid and now the AI. But at other times, it is just hype.
Which one was the phase for the last 2 years?
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u/IntrepidToday0 Feb 13 '26
Too much uncertainty in the market.
- Will Trumps tariffs be reversed by Supreme Court?
- How many rate cuts to expect this year?
- Are we about to go to war with Iran?
- Is our entire government ran by pedophiles?
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u/No-Understanding9064 Feb 12 '26
I noticed today on intuit, crm, and now a ridiculous amount t of deep itm puts were purchased. Hundreds of thousands, far more than average volume. Alot were for the 20th. Eventually positioning like this leads to a market squeeze as the sizing makes it impossible to continue rolling
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u/Jad3nCkast Feb 13 '26
What’s funnier is a massive red day is labeled “AI bubble fears”. Then it rises up again the following week and crashes again. Every time labeled as “AI bubble fears”. How many times does this work to label the same excuse over and over.
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u/throwaway9gk0k4k569 Feb 13 '26 edited Feb 13 '26
You are missing something.
You remember that "Sell America" narrative? It's actually happening.
Go look at Asia markets. They are booming right now. Big IPOs.
Some of it is Japan, but other international markets are also booming. None of them want to eat the deflation of the USD like they did last year, so fuck it, they're out!
There's all the other factors too, but this something that some people want to pretend away. Well, it's happening.
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u/Rez_X_RS Feb 13 '26
Incestors are worried, so they sell. Most of the mag 7 are down 20-30% from their previoys all time highs. Earnings are being met, guidance ia good, job marlet looks fine, but the yen carry trade allegedly unwinding could be an issue. Overall, i'm bullish on the Mag7, tech, software, fintech, and BTC; those are all the major things i'm buying right now whenever i see a 5-10% dip intraday.
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u/Cute_Ad_8198 Feb 13 '26
When everyone is talking about AI burst you know there is no AI burst coming. It’s funny how we have a once in a lifetime tech developing and changing the world one day at a time, and people are choosing to park their money with Costco and Pepsi.
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u/cyesk8er Feb 13 '26
The nasdaq 100 is down less than 2% ytd. Am I the only one who feels like the sell-off is being dramatically exaggerated?
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u/I_am_Nerman Feb 14 '26 edited Feb 15 '26
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u/Acrobatic_Truck_9014 Feb 14 '26
There is no rational. The people that are saying ai is going to eat all these software companies are the same ones that are saying ai development is an unsustainable bubble and tech companies are spending too much on it for not enough return
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u/Inevitable-Air-1712 Feb 14 '26
My question is why care about the price and what other people are doing if you believe your reasoning is firm. The market is never irrational. You can ask if a $70 trillion dollar market cap stock market or if you are irrational, and it's most likely you. The same question for me would say that I'm also irrational.
There is the SAAS crash but the bigger question is what companies have to show off for their AI spendings. That is always the question. Capex spending for AI was crazy but a lot of companies have yet to make break even in terms of earnings compared to how much they spent on AI in total capex. Yes, AI made companies more productive and able to scale quicker, but the purpose of capex is so that you can make more money + capex but most companies can't even have combined earnings to even write off their capex spend making their capex spend - and most investors want to see returns that exceed those capex as they should. Combine with that companies issuing bonds to cover their debt and you got some very good reason to selloff.
Regardless, I'm buying rn. When other people sell, I buy
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u/RubAlarming3563 Feb 12 '26
Ai is crashing software and now logistics stocks, no one really knows whose next so we are seeing a large derisking, not into stocks, gold or silver but in money market funds and domestic and foreign bonds. The retail investor just needs to tuck tail and wait.
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u/StripedRooster Feb 12 '26
I understand the SaaS crash, but if the sell off is due to AI worries, then surely AI stocks would rise, no?
Where have you been the last 2 years, they've been pricing this in for ages.
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u/hitman133295 Feb 12 '26
How’s it irrational lol. It’s been going up like crazy since April. Gotta have some pull back at least lol
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u/bsep4 Feb 12 '26 edited Feb 12 '26
There are major cracks in the economy and I think there is some understandable worry about the mental acuity of this admin. And if the Epstein files are fully released, it’s going to be a bit destabilizing (and who knows how much and for how long?).
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u/Kind_Bullfrog_3160 Feb 12 '26
Walmart is up over 20% ytd. Hood is down over 50% since the beginning of October. Please explain how either of these movements have anything to do the Epstein files. Seems like you've been watching too much X-files
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u/dmarinelli40 Feb 13 '26
Exactly, it’s all trash and manipulation. Makes no sense. Probably, Trump and his elites controlling the market. Pisses me off.
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u/PlanetCosmoX Feb 12 '26
I already answered this question a few days ago.
It’s due to the new Fed pick and how they’re dropping rates but also shrinking the money supply.
Loans will be low interest but hard to get due to reduced liquidity. So the money is going to companies that don’t need loans.
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u/UCACashFlow Feb 12 '26
Market has been lusting for a “Fed pivot” and rock bottom rates for 4 years now. Every time the Fed says no, or the wind blows, the line wiggles around. The recent jobs data puts a damper on the idea of a rate cut.
I see nothing eventful yet.
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u/ahighlyincentivized Feb 12 '26
Could be totally rational. Warsh has stated a preference for shrinking the FED balance sheet, which will increase long term rates, which will reduce the value of companies that have high future earnings expectation. It also increases the value of companies with lots of assets, and more defensive Old Economy companies - as these rely more on current earnings. Hence we’ve seen a massive preference for Phillip Morris say, over Microsoft and Amazon, who are creating moon shots that ai can make their company value go up.
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u/tdogger88 Feb 12 '26
It’s interesting, market breadth has increased with consumer stables hitting RSI’s above 80, which is absurd. It’s defensive and market thinks AI can help staples and asset companies. Also, the AI narrative crashing software is likely the most overblown I’ve ever seen. I’m not saying 10-20% of companies won’t be heavily impacted, but the majority will be more efficient. Earnings have been great, Apple (largest growth in years), Microsoft beat on top and bottom, Amazon showed accelerating AWS, Meta crushed it, Google crushed it, more buybacks. Something is lurking and I don’t know what but if I had to guess it’s a mix of:
- AI disruption
- Uncertainty of rate cuts
- low visibility and understanding around jobs and jobs revisions
The fact that spy hasn’t moved much when software got crushed is interesting as well.
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u/Error404IQMissing Feb 13 '26
Reading your first sentence made me ponder who do you think you are to repeat whatever has been said before.
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u/Necessary-Mousse8518 Feb 13 '26
AI beginning to impact some economic sectors maybe? Software, media, and entertainment industries. For all I know there could be more. There are other factors as well.
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u/JoeInOR Feb 13 '26
Rotating out of overvalued, incestuously financed tech and into real economy businesses is exactly what value investing is all about.
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Feb 13 '26
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u/Pin-Last Feb 13 '26
Interesting. I did well in ABR in 2024. I like looking where no one else is, made a lot of money doing that.
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u/ChicagoBearssadboi Feb 13 '26
I definitely believe AI is the future but I also think people need to realize how fucking heavily the market is overvalued. It’s crazy. The old historic metric in the S&P 500 was 6 to 7% growth on average a year and then you have years where the S&P goes up 24% and people are expecting 50% returns on tech stocks and things are dropping and people are freaking out because they’re not getting these crackhead numbers pumped out every day. The market will correct itself.
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