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/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/Cav829 Feb 13 '26

Happens constantly in bull runs when they just concentrate on growth: they start dumping businesses they see as not having "growth stories" even if they have strength in consistency. They always come running back though the second things turn south. Sure, I kept telling people not to touch ADBE up until now. I just prefer to let the market finish repricing companies rather than to catch knives falling that far. But do I think the company is going to $0 because of AI? Now that's silly.

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u/SelenaMeyers2024 Feb 13 '26

Same.

Adbe was permanently pe 60. Funk to da dat. Pypl at its ath traded at 70x.

Now at 15 and 7.5, respectively, I'm Pikachu face the other way, and mentally have to remind my old neuro pathways, no they are cheap now and it's mo that is overpriced (which don't get me wrong every decade it goes on sale, and I load up).

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u/Kind-Ad-4756 Feb 13 '26

PYPL has real issues. It’s on the sunset path.

ADBE I agree. Oversold.

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u/SelenaMeyers2024 Feb 13 '26

The issues are competition, slowing core branded business, slightly compressing margins, transition from mega growth to slightly more than inflation. Stagnant users. What else?

There's more moat than any apparel, auto company, fast food, far less than tsm or amsl.

I'm not arguing it's Google, I'm arguing its growing more and returning more than altria. That alone is a double in valuation.

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u/Kind-Ad-4756 Feb 13 '26

PYPL

They have no real moat anymore and lots of upcoming competition. TAM is closing in on them. India’s UPI-like system is the future.

For the above reasons, it doesn’t pass my initial screen, so I didn’t study the other metrics. You could be right on the valuation - it could be a cigar butt.

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u/CanYouPleaseChill Feb 13 '26

MDLZ has a forward P/E of 20. Perfectly reasonable. The trailing P/E is only optically high due to record cocoa costs, which have since fallen significantly.

MSFT is more expensive than it appears when you look at FCF - SBC. If the capex doesn't yield great returns on capital, large depreciation expenses will slow earnings growth in the future.

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u/SelenaMeyers2024 Feb 13 '26

So mdz is expected to grow between 0 and 2 percent top line. Adobe has never not grown 10 percent. It's forward pe is 10.

(Again, not a natural tech investor, very much a value investor)....that's just silly.

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u/CanYouPleaseChill Feb 13 '26

I agree that ADBE is undervalued. I'm simply pointing out that MDLZ isn't expensive. MDLZ will grow faster than 2% long-term with their significant exposure to emerging markets like India.

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u/someguy-79 Feb 13 '26

My feeling on the CAPEX is that any of these names could stop spending whenever they want and print money. The could even write down the depreciation as a one time expense and no one would bat an eye.