Apple, Facebook and other big tech stocks tank, weigh on Wall Street

[question everything]

Source: CNBC

Big tech was slammed Friday as investors took profits from the group, which some fear has become a massive market bubble.

The sell-off accelerated in afternoon trading, with the Nasdaq falling 2.4 percent, and names like Facebook and Apple, down 4 percent. The S&P tech sector was down 3.3 percent Friday but was still up 18 percent for the year.

Goldman Sachs on Friday released a report on the top five outperforming mega-cap names in tech with some warnings on valuations and concerns that their volatility has become extraordinarily low. In fact, the stocks had become closely correlated to safe haven plays, like bonds and utilities.

Goldman studied the valuations of the tech leaders, known as the FAAMG — for Facebook, Amazon.com, Apple, Microsoft and Alphabet (Google). (It left out Netflix from the original FANG, since its impact on the S&P 500 is still too small.)

What it found is that the current-day tech stocks have advantages in cash flow, valuation and cash balances over the top five tech names in the first quarter of 2000 — just before the bubble burst. But the current group is behind in profitability, as measured by gross profits and total assets. The tech bubble names Goldman studied included Lucent, Cisco, Oracle and Intel. Microsoft was the only stock to make both lists


Read more: http://www.cnbc.com/2017/06/09/fang-stocks-slammed-goldman-compares-them-to-tech-bubble.html

[mahatmakanejeeves]

1. If only you had left ***** alone, this never would have happened.

AAPL? Could be profit-taking. It's up bigly over the last several months.

[question everything]

2. A comment earlier on CNBC

was that the it is time for correction (I suppose there was a time in the past five years, or so) and you start with the "big dogs," with the ones that went up fast.

Will have to see what happens next week.

[still_one]

5. It was the NASDAQ that was really effected. Most of the blue chip did well. My gut tells me this

was perhaps a move to safety

[elmac]

3. Its all a big ponzi scheme nt

[Achilleaze]

4. The Trump slump

Thanks Republicans

[politicat]

6. It's mid-June. I think this is normal.

Small investors (under a half-mil) tend to own what they use, and these days, that means tech stocks.

My university starts sending out billing statements for the next fall semester in May. Payments start coming in over the summer, and are due before school starts in late August. Tax payments start coming due in late May/early June for people on payment plans. The end of the fiscal year is coming up at the end of June, so there's a lot of budget reconciliation going on. People take vacations. Every year, several thousand teachers start retiring and cashing out at the end of the school year. The most common time to move is over the summer break, so people start selling off to have cash for down payments, renovations or moving expenses. It doesn't take a lot of selling to get the bigger investors following a trend, especially with algorithms tracking sell-off data. And we still have a seasonal aspect to war and trade war, because we're still somewhat at the mercy of weather, seasons, and agriculture.

I've been watching this cycle every year for about 5 years, since I became responsible for my (now late) grandmother's fortune. I've tracked when I mess with her portfolio -- it's in June, or October. (That has a lot to do with tuition, too.) And then looked at the historical data -- it's regular, because humans are more alike than different, and we tend to behave more alike than different.

This isn't unexpected, it's something to watch, but it shouldn't be panic time, either.

[question everything]

7. Makes sense. And, I suppose, young people do not pay attention to tax on capital gain

Now that we retire and pay estimate taxes every quarter, whether or not we will have capital gain makes a lot of difference. And, yes, we've owned Apple since 2004 though we did sell some so the gain is large.

[politicat]

9. 13 months is all it costs to have LTCG. And 15% is not *that* painful.

13 months ago, tech stocks were recovering nicely -- price was up a bit, but not flying, and the market was feeling confident. Low level were moving money out of long-term securities and bonds and back into index and individual funds. Looking at history on Apple, Amazon, Google, et al, they were relatively inexpensive in March and April last year (Apple had just split) then they started climbing and was a sector that didn't get squirrelly when the international markets went sideways in June, when the Chinese popped their bubble.

Another thing -- most smalls are in index funds and ETFs, which should smooth a dump, but there are a lot of popular 401K and ETF funds that lean heavily tech. Indexes and ETFs are usually the first to be dumped for cash, because index and ETF are safest for neophyte investors.

I'm not following as closely now, because a) I no longer have to worry about paying for a decade in a nursing home, and b) the single beneficiary gets 50% of annual profit, and can't touch the capital or the other 50%, which becomes capital. Since that beneficiary is not my favorite person, I stuffed everything into safe funds, and as long as nothing drops below our purchase price and fees don't eat everything, I'm not going to complain. I can pull 4% per year without more than a quarterly check, and I'm not getting paid to manage this inheritance.

[Yavin4]

8. Summers are a good time to buy. n/t

[politicat]

10. Yes, indeed.

Just remember there will be a flux in October, and don't panic.

[nitpicker]

11. Remember this old chestnut?

"Sell in May and go away."

Not sure if this still applies...