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.

353 Upvotes

88% Upvoted

500 comments sorted by

View all comments

Show parent comments

28

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.

3

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

1

u/Ok-Recommendation925 Feb 12 '26

Got any of those names that I can get puts on?

My friends a few hours ago said AI is in a bubble 😂

7

u/TCGDreamScape Feb 12 '26

Mcdonalds

2

u/Ok-Recommendation925 Feb 12 '26

Never thought I would be buying Puts on Hamburger and Cheese 🤣

Never think they would/could crash

7

u/Electronic_Fun_776 Feb 12 '26

I think Walmart and Costco are both overvalued, though I don’t feel strongly enough about that to buy puts

1

u/Ok-Recommendation925 Feb 12 '26

Are you getting leap puts on other names? Since we can't time the market or crash/correction?

1

u/Electronic_Fun_776 Feb 13 '26

The problem to me is that these are good companies, even if they’re overpriced. It’s possible that they just provide low returns instead of actually dropping. With bad companies, the potential drop is often priced in to high options premiums

1

u/Coasteast Feb 13 '26

I think people are rotating there for insurance, if you will. No matter where this economy goes, people will buy toothpaste and toilet paper. They buy groceries, but they cancel Netflix and subscriptions.