r/valueinvesting
Nasdaq (-4% today) just had its worst day since April 2025. 4% just today and it's not done. Rate Hike is coming.
Nasdaq drops 4% amid high valuations and expected rate hikes; author advises dumping frothy stocks and holding high-quality tech giants.
- High-quality tech giants have strong fundamentals to weather market downturns.
- The AI cycle and real economy provide genuine growth opportunities.
- Nasdaq is overvalued with P/E around 37, significantly above the historical healthy range.
- Expected rate hikes will drive capital from risky stocks to fixed deposits, causing persistent selling.
TLDR: Nasdaq had its worst day since April 2025 and I think it falls further this year. Market's expensive (P/E \~35+ vs a healthy 25) and rate hikes are coming (BNP Paribas sees 3 from December). Rising rates pull money out of stocks into fixed deposits → selling → lower prices. Own strong, high-quality names (Amazon, Google, Apple, Nvidia; Micron over SanDisk), dump the 100x-P/E no-revenue froth. AI cycle and economy are real; the froth isn't.
Worst day for the market since April 2025. Nasdaq down \~4% in a single session.
Will it come down more? Yes. When? Within this year.
Here's the why, and what I'm actually doing about it.
1. The market is expensive. The Nasdaq is trading at an average P/E north of 35 (around 37 right now). That means the average company is priced at \~37x its earnings. Historically, a healthy number is closer to 25–30. Above 35 isn't "fair," and it isn't "cheap on a dip" — it's expensive. Full stop.
2. Rate hikes are coming. The banks have turned hawkish — BofA now sees no cuts and a higher-for-longer path, and BNP Paribas is openly calling for three rate hikes starting December. And here's the mechanism people forget:
When rates go up, money leaves stocks. Not everyone makes 20% in the market — plenty of people make 4–8%. If a fixed deposit pays them a solid, risk-free return, why would they stay in something this risky? They won't. They sell their shares and park the cash in FDs. Multiply that across millions of people and you get real, persistent selling. That's how prices come down.
So what do you do?
Stop holding super-expensive, frothy stuff. Anything at 100x earnings with little or no revenue — a lot of the optical/photonics hype names, the Coherents, Intel, AMD, Cornings of the world (v high P/E) — I'd be very careful. It is not the time to hold them.
Own only high-quality, strong companies — the ones with the steel to take the weight of a falling market. For me that's names like Amazon, Google, Apple, Nvidia. Even in memory, I'd rather hold a Micron than a NAND name like SanDisk — the weaker name falls harder.
And to be clear, I'm not bearish on the story. The AI cycle is real. The economy is real and it will sustain. The Broadcom wobble is a blip, not the end of the trade. But froth is froth — it does not survive a rate-hike tape. Quality does.
Hold the steel. Cut the froth.
Just another emotional nonsense post
AI's version of profundity.
Did you even have any money left to capitalize on today's drop?
written by AI. Full stop.
Nobody is going to click on your ig link lol
Just go away..
Good job numbers. Easier to hike rates.
Proven multiple times that time in the market >>> timing the market. Drop the money in.
Sucks to be you. I think most people can tell that it’s 100% AI. The em-dashes, the random bolding of words or phrases, the list.
This is basically copy pasted from gpt lol
I saw AIS drop 6% and bought like $600 worth. It then dropped another 6% lol.
Welcome to the get fucked club 💎
They won't rate hike. You know why?
Too many Trump lackeys on the fed now?
There are over 39 trillion reasons why the Fed probably isn’t hiking rates. Interest payments are already eating up much of the federal budget and the Fed isn’t going to jack up rates and let it devour it further. If we need 5 trillion of AI buildout the hyperscalers won’t be doing that at high interest rates. The Fed funds rate also only controls the short end of the curve.
The government will do what it has always done throughout history in these situations which is to debase the currency. The treasury and the Fed will enter into some form of yield curve control to buy down the 10-year treasury bond, the hyperscalers will get their cheap debt, liquidity will spike with all of the money entering the economy, and it will all be passed off as as an economic boom with high reported GDP growth. Asset prices will spike while consumer prices (the only inflation the feds care about) will rise at a much slower pace because they will presumably be offset by productivity gains. The rich will get richer and if the plan doesn’t work the public will be left holding the inflation bag.
AI slop post