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Number of Nasdaq Stocks Down 50% Or More Is Almost At a Record (bloomberg.com) 78

Posted by BeauHD from the downward-spiral dept.
An anonymous reader quotes a report from Bloomberg: A near-record number of tech stocks have plunged by some 50% in an echo of the dot-com crash. Roughly four in every 10 companies on the Nasdaq Composite Index have seen their market values cut in half from their 52-week highs, while the majority of gauge members are mired in bear markets, according to Jason Goepfert, chief research officer at Sundial Capital Research. "Whatever the fundamental and macro considerations, there is no doubt that investors have been selling first and trying to figure out the rest later," Goepfert said in a note.

Another way of thinking about the tech wreck: At no other point since the bursting of the dot-com bubble have so many companies fallen like this while the index itself was so close to a peak. "Valuations are at historical highs, companies are raising billions based on fairy dust, and the Fed is signaling a tightening cycle," Goepfert said. "All of these are scaring investors that we're on the cusp of a repeat of 1999-2000." [...] The Nasdaq Composite index is on pace for its biggest weekly decline since November, even as it rose in the New York afternoon trading session Thursday. A 3.3% fall Wednesday marked its worst single-day session since February last year.
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Number of Nasdaq Stocks Down 50% Or More Is Almost At a Record More

Number of Nasdaq Stocks Down 50% Or More Is Almost At a Record

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  • A near-record number of tech stocks? (Score:5, Funny)

    by oldgraybeard ( 2939809 ) on Friday January 07, 2022 @08:08AM (#62151639)
    maybe having a cash burn rate and no positive cash flow hopes is not a valid business model?
    • It's already beginning. The socialists in Wallstreet are starting to call for more tax payer funded money injections into the black hole. The rate of change for these stocks "down from 52 week highs" on the upside was ridiculous to begin with. No one was complaining then.. So if anything, stock prices are really just reverting back to the mean. Also keep in mind that the stock prices are determined on the margin, so unless you also factor in the trading volume, this article is probably misleading reade

      • The socialists in Wallstreet are starting to call for more tax payer funded money injections into the black hole.

        You mean the last decade+ of taxpayers picking up the tab hasn't been enough? Perhaps it's time we let businesses fail if they can't survive without trillions of taxpayer dollars to keep them afloat.

        • Re: (Score:1)

          by Anonymous Coward

          Actual conservatives wouldn't have bailed out the banks and auto makers back in 2008.

          • And actual liberals wouldn't have allowed them to run wild and unregulated until they needed to be bailed out. Unfortunately, we live in a world of pseudo-conservatives and pseudo-liberals, both of whom are beholden to big business interests.

        • Re: (Score:1)

          by Tailhook ( 98486 )

          You mean the last decade+ of taxpayers picking up the tab hasn't been enough?

          So we're pretending tax payers are actually paying for all of this and it's not borrowing and fed debt "monetization"?

      • Corporate welfare is a better term. Socialism is getting way overused to mean literally anything other than full throated greed and survival of the fittest. Please stop using "socialist" for things that are not remotely socialist. If you think asking for bailouts is indeed equivalent to socialism, then pull out your dictionary and stop listening to faux news.

    • Wash your mouth out.

  • For many years now I've been saying that the stock market is one big legalized gamble which creates fake value out of thin air - a nice way for governments to cope with the inflation caused by a surplus of cash they create by printing money. No one has proven otherwise. Stocks are essentially worthless. And in addition to stocks there are even more instruments of gambling: the whole derivatives market. Of course from time to time people get to their senses and realize it's all one big inflated overhyped bub

    • Re:Gambling (Score:5, Insightful)

      by ShanghaiBill ( 739463 ) on Friday January 07, 2022 @08:45AM (#62151727)

      No one has proven otherwise. Stocks are essentially worthless.

      You are delusional. The share of national wealth going to corporate profits is at an all-time high. After a long bull run, stocks are due for a correction, but overall, owners of capital have never been more richly rewarded.

      • Re: (Score:1)

        by eriks ( 31863 )

        And that proves what exactly? That the legal gambling racket is working well for the "house"? I'm shocked, shocked!

        I wouldn't say that stocks are "worthless" but the entire "market" is (essentially) a delusion. Imaginary money created out of whole cloth. It's absolutely true that corporate profits are at an all-time high, while the actual value "trickling down" to the vast majority of working people is at an all-time low, when compared to the total money supply.

        Sure, there are a bunch of people that are

        • while the actual value "trickling down" to the vast majority of working people is at an all-time low, when compared to the total money supply.

          Wow, that is irrelevant. No wonder you are confused. Are you also going to say that Faberge Eggs are worthless because they don't trickle down?

          • Re: (Score:2)

            by eriks ( 31863 )

            Wow. Way to miss my point. I didn't say that stocks are "worthless". I don't think that, that was the parent poster, though I do mostly agree with his original premise that the stock market has become (essentially) legalized-gambling for the billionaire class.

            To re-make my point: Faberge eggs have value because people ascribe value to them. So it is with stocks, and money itself for that matter. That doesn't change the fact that the system that we have provides (stable) value only for those that are (es

        • Re:Gambling (Score:4)

          by ShanghaiBill ( 739463 ) on Friday January 07, 2022 @01:33PM (#62152505)

          That the legal gambling racket is working well for the "house"?

          Do you understand what "stock" is? It is a certificate of ownership.. When you buy stock, you are "the house".

          If by "the house", you mean the brokers, their fees have never been lower.

          while the actual value "trickling down" to the vast majority of working people is at an all-time low

          Are you really this clueless? Profits aren't "trickling down" to workers because they are going to the stockholders. Where else do you think the money is going?

          • When you buy stock, you are "the house".

            Institutional investors are The House. Individuals are just along for the ride... tenants at best.

          • Re: (Score:2)

            by eriks ( 31863 )

            Yes, I understand what stock is. The "house" in my analogy is comprised finance companies (investment banks, hedge funds, etc.) that engage in "speculative" practices like high frequency trading, short selling, and creating arcane derivative "investment products" that are basically untethered from reality, simultaneously extracting and inflating value: making money, regardless of whether the market is going up or down. In other words: gaming the system. Much (but not all) of that used to be illegal under

        • Re: (Score:1)

          by Anonymous Coward

          while the actual value "trickling down" to the vast majority of working people is at an all-time low

          There was a time when "working people" contributed to the economy with their brute force and manual dexterity rather than their intellect and brute force and manual dexterity was at a premium.

          The developed world has changed with the advent of computers, automation, and robotics-lite coupled with a decrease in expectations of service (such as pumping your own gas, ordering and picking up at the counter or at l

      • The NASDAQ is near its all-time high, so the claim of this article is BS. Yeah, so 40% of stocks have under-performed the average, just like 50% of people are of below-average intelligence; oh, and water is wet.

        • Yeah, so 40% of stocks have under-performed the average

          That is not what TFA says. 40% are not just "below average", but have lost half their value, despite the overall market hitting record highs.

          What we have is a "winner take all" economy. The dominant company in each sector is extending its lead while its competitors struggle.

          Most attempts to fix this problem are counter-productive because big companies have the resources to co-opt regulation and twist it to their advantage.

    • Re: (Score:3, Insightful)

      by OpenGLFan ( 56206 )

      It's not a gamble if you're guaranteed a return. When these reckless companies that donate massive amounts of money to politicians fail, the US government has been shameless about propping them up and bailing them out with taxpayer money. If you know you can bribe a politician for a nominal fee in exchange for socializing your losses and privatizing your gains, all-out recklessness becomes a winning strategy.

    • Stocks are worth what someone will pay just like everything else, so until they crash they're worth something.

      The best way to fix the problems with the market is to delay trades. And maybe also institute a small fee. The proceeds should go to social services. That'll be the day...

      • There already is a small S.E.C. fee on stock transactions; the money goes to the federal government.

        Delaying trades by how long? A second? A minute? An hour? A day? A week? a month?

    • Stocks are essentially worthless

      You have a retirement account invested in the stock market at all? You've probably got a few shares of AAPL in your portfolio. Mind if I buy those "essentially worthless" shares off of you at $5 a pop?

      Your answer, of course, should be a resounding "go to hell". Those stocks are worth a whole lot more than $5, simply because someone else would be willing to pay a lot more for them.

      • If there's a stock crash and it hits the portfolios of Boomers hard, that's a feature, not a bug.
  • This isn't a surprise. Remember 2008 and credit default swaps? Remember when we took a bunch of bad mortgage loans and combine them together into a security you could invest in? We did the same thing with business loans around 2017. The laws that were passed in 2009 intended to prevent that from happening had been repealed. Well actually the laws won't repealed what they did was pass a new laws that overrode and eliminated the provisions of those 2009 laws so they could repeal them without getting the bad

    • Pumping money into the back end of the US economy is a very short-term fix.

      The thing is, they've been doing it since 2008. They just ramped it up more after Covid hit.

      So it actually did "work" for a while, in that it caused the markets to continue to increase... never mind that the eventually crash will be horrific, and affect the entire world.

      Eventually is much closer than you might think now.

    • Comment removed based on user account deletion

  • Better Explanation: ZM (Score:5, Insightful)

    by TheCowSaysMoo ( 4915561 ) on Friday January 07, 2022 @08:51AM (#62151745)

    Just click the "1Y" graph for ZM [marketwatch.com]. 52-week high in mid-February 2021 while the universe was still heavily using technology to continue working through the pandemic and avoiding the early 2021 COVID surge. Then, a slow crawl downward as that has become less and less the current reality.

    The real question is: what percentage of tech stocks have a current price that is higher than their January 2019 price? It would seem reasonable that you could find some overvalued (price higher than Jan 2019) and undervalued (price lower than Jan 2019) stocks based on that measure combined with how poorly/well the company has navigated the pandemic.

    A near-record number of tech stocks have plunged by some 50% in an echo of the dot-com crash.

    Which record? Based on their own graph, the record appears to be higher than 75% in 2009, so I don't see how "roughly four in every 10 companies" (actually less than 40%) is a near-record unless we're replacing journalism with hyperbole.

    • I'm also interested in which companies they're talking about, they don't really say anything specific and all the big tech stocks I follow are doing ok. Maybe down a little bit right now but nowhere near the doom and gloom they're pushing. There's a lot of junk on the market which has been overvalued for years so it might just be certain chickens "coming home to roost," but without knowing what they're panicked about it's hard to do more than speculate.

    • Re: (Score:2)

      by ceoyoyo ( 59147 )

      The NASDAQ as a whole is at about the same level it was on Dec 22, Dec 3, Oct 22, Sept 3, and higher than it's been at any time prior to that.

      So if half the companies listed really did lose half their value, they're all the very small ones.

  • Rich kids have to pretend to have careers, right?

    So you get art galleries and hedge fund managers, depending on which hemisphere of their brain is less deficient than the other.

  • If the fed doesn't back down (Score:5, Interesting)

    by stabiesoft ( 733417 ) on Friday January 07, 2022 @09:27AM (#62151831) Homepage
    Expect much much much more pain. For years the fed was printing 120B/mo. That is roughly 4 grand for every person in the US every month. The current plan is to stop completely by march, and worse in march they might raise rates 1/4 point and 2 more 1/4 point raises this year. The fed is taking away the punch bowl and the hangover is going to be bad. That with maybe 3/4% interest rates. Historically low, almost insanely low interest rates. I'll call the fed a magician if they can pull this off without a recession or depression in the next 2 years, AND cut inflation back to 2%.

    • Re: (Score:1)

      by Tablizer ( 95088 )

      Stimulus gov't spending isn't the same as "printing money".

      > The fed is taking away the punch bowl and the hangover is going to be bad.

      One possibility is that automation allows the GDP to grow, which shrinks debt (in a relative way). If the GDP is capable of growing quick, then most the downsides of dept spending and money printing go away. However, it is tricky balancing inflation, money supply, employment rate, consumer confidence, etc. No matter what the Fed does, the future could be bumpy.

    • America can PRINT dollars to buy OPEC oil; Rest have to EARN dollars https://en.wikipedia.org/wiki/... [wikipedia.org]

      • US is currently a net exporter of energy. https://www.eia.gov/energyexpl... [eia.gov] Still a net importer of oil, but most is re-exported out as distilled products. And we are currently exporting a floatilla of LNG cargoes to the EU. No, the printing of dollars at the moment is all about imports from China. 71B in November. With all the trade sanctions.

  • The thing I learned in a class decades ago about mutual funds being the safest bet is still true today. ETFs are probably the 2nd safest. Someone said it on here, it's not perfect, but the stock market is the only game most people in the US can play where we have a decent chance at saving money and not having it lose value. Although yeah, buying land is probably a pretty good option, too, if you are not in a metropolis.

    Do not buy individual volatile stocks if you will be in trouble if you lose all of that m

    • Re: (Score:1, Informative)

      by ciaran.mchale ( 1018214 )

      The marketing claim of mutual funds is basically, "Investing in index funds will give you only average growth. At our mutual fund, we have researcher continually looking for information on thousands of companies, and a fund manager who is an expect at sifting though this mountain of information to make informed investment decisions. So by investing in our mutual fund, you will get above-average growth."

      However, studies show that the majority (80% or more) of mutual funds underperform compared to index funds

      • Those index funds you mention are literally mutual funds.

      • Re: (Score:3)

        by bws111 ( 1216812 )

        First, you seem to have no idea what a mutual fund is, since you seem to think index funds are not mutual funds.

        Second, you seem to think that all 'mutual funds' promise above average growth. This is nonsense. Certainly some 'aggressive' funds have the potential for above average growth, but they also have above average risk. Anyone investing in these types of funds should understand that - it is not exactly hidden or secret information. These types of funds are fine and may be a good choice if you can

        • Oh come on. Even if index funds are technically mutual funds, in common parlance a mutual fund has investments chosen by an expert. while an index fund has automated choices made to reflect a market.

          Secondly, of course mutual funds aim for growth. WTF? There's a risk vs. reward calculation, but if there was no attempt at growth people would go for even safer investments like government bonds.

          Index funds make lots of money over time, generally out performing what most people would call mutual funds but yo

        • If you were retired around 2008 and had all your money invested in index funds, you were royally screwed.

          I read and hear this all the time, but effectively, that is only true for the money you use up. All the other money you could just put back in the same funds which would then rides the wave up, going up more than the other funds.

          Put otherwise, I don't believe the common wisdom of moving all your money out of high risk funds into stabler low risk funds before retirement is such a great idea. Unless yo

      • Funds can prioritize areas, regional, environmental, social giving people options to direct there investments. Might not outperform the broader index but less chance of directing resources to less desirable areas. If funds have enough clout they can get Directors elected and steer further. Unfortunately for the small investors they are least protected and greed tends to hurt them so the index fund is most diverse and harder to manipulate. Pick your poison.

    • I've read at least 2 of his [amazon.com] books [amazon.com] and he gives very good reasons for this stance, but effectively he's entire sermon is invest in a no load/low fee total market index fund or an S&P 500 fund, add to it regularly, and forget about it until you retire. He was also the creator of the first index fund, the Vanguard S&P 500 Index Fund [townhall.com], the in 70's, so people say he's biased.

      He effectively claims, paraphrasing here, the game is rigged against the individual investor and this is your only way to get a fai

    • Re: (Score:2)

      by ceoyoyo ( 59147 )

      An ETF is really just a mutual fund without some high priced finance guy poking it periodically. If you like paying for finance dude's second beamer, go mutual fund. Otherwise, ETF.

      Whatever you do, put some money in and don't look at it again for ten years.

  • A better analysis (Score:4, Insightful)

    by RogueWarrior65 ( 678876 ) on Friday January 07, 2022 @10:14AM (#62151991)

    Dot-com and the housing crisis were both started and fueled by bullsh*t in the marketplace. For dot-com, everyone want to get into IPOs for companies that had no real product. Those companies were spending a crap ton of money on Herman-Miller chairs and other largesse. For the housing crisis, it was small banks being brow-beaten into giving loans to people who couldn't afford them and then repackaging those loans into CDOs (which, btw, had existed just fine for 20 years). Eventually, the music stopped when there was nobody left to buy the bad loans.

    So, where is the bullsh*t in the marketplace right now? It's not in tech stocks for the most part. There's a lot of it in the student loan world. And there's a lot of it related to COVID. The longer the bullsh*t persists, the worse things are going to get. The other bullsh*t is the onslaught of the subscription business model. Every company is trying to jump on that bandwagon and eventually the consumer is going to realize that they are leaking money and will stop spending it on that type of product. Some of that is tech but not all.

    • Re: (Score:1)

      by Tablizer ( 95088 )

      > it was small banks being brow-beaten into giving loans to people who couldn't afford

      Please elaborate.

      • Just one item among many: SEC regulators refused permission to open new branches to banks that did not meet racial quotas on loans.

    • Those poor poor small banks. Forced to lend other people's money and then forced to put non-refundable fees into their own pockets. The humanity!

      If I were in their shoes, I would be crying alone while sitting in my Mercedes-Benz in front of my vacation home in Rockies. But I would put a brave face on and take my kids skiing, for the sake of my family, of course.

      It is not the 19th century anymore. Ultimately, those loans happened because there were buyers for the notes. So a new loan, whether good, bad,

    • The way I see it the bullsh*t in the marketplace right now is in crypto currencies, but only time will tell.

  • high. I haven't checked today, but yesterday NVDA was sitting at a ~99 P/E, that's almost 100 years of current earnings to break even if you buy at that price (assuming they stay the same). Many others are similar. Things are massively overvalued in general. [gurufocus.com]

    • Re: (Score:2)

      by ceoyoyo ( 59147 )

      Nvidia's earnings per share are more than six times higher now than they were five years ago. The stock price reflects how the company is expected to grow (or shrink) in the future.

    • NVDA has a P/S of 31, which combined with a 99 P/E indicates that they have no room to grow profits by increasing prices. In my opinion, both of their 2 major markets, video cards and cryptocurrency miners, are doomed. The stock is badly overpriced.
  • Let the companies that are using cheap Fed and investor money to disrupt public services and small businesses burn.

  • Increasing the zero risk income for finance is hurting investing. The Fed wants a crash.

  • Roughly four in every 10 companies on the Nasdaq Composite Index have seen their market values cut in half from their 52-week highs

    And yet, the index is just about 7% off its historical high. The three biggest companies (Apple, Microsoft, and Amazon) are 6%, 10%, and 14% off their all-time highs, respectively. The NASDAQ-100 Technology Sector (NDXT) shows similar drop-offs from historical highs.

  • Tulips, Tulips..

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