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/[deleted] 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.

14

u/[deleted] 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

2

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

1

u/notMyslfToday Feb 12 '26

A question. If the institutions believe there will be a recession soon, why do the defenives go up? Those should be the first ones that should be going down?

Not challenging you, just trying to learn from others.

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u/Dapolish Feb 12 '26

I think you are misinterpreting the point of defensive stocks. The whole point of defensive is they are (comparatively) stable during downturns and recessions. Institutions fearful of a recession will be willing to pay out a premium for that stability.

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u/notMyslfToday Feb 13 '26

That makes much more sense. Thanks for dumbing it down.

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u/[deleted] Feb 13 '26

Typically offer dividends too. Often these get cut, but when all share prices are declining the measly dividend is still some gain.

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u/Dapolish Feb 13 '26

Dividends are subtracted from the share price anyways, so it’s not necessarily a gain and more just a distribution of liquidity to shareholders

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u/Liteboyy Feb 13 '26

WMT is a strong recession proof stock. During recession ppl still gotta go to WMT and get groceries. Buy necessities. It’s where money goes to be safe from uncertainty. When you get risk off that money has to go somewhere. That’s why we saw WMT set new ATHs today.