Tech in the Tank: Nasdaq Declines as Traders Bail

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April 7 (Bloomberg) –- Rosenblatt Securities Analyst Brian Blair, J2Z Advisory President Jay Pelosky and Bloomberg’s Cory Johnson discuss the troubles in the tech market. They speak with Trish Regan on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

Here in?

Have we gotten ourselves to a bit of a mini bubble intact, and should investors be backing away from that?

I think it is more of a healthy correction necessary.

If we wind the clock act, we have a nerdy eight percent gain on the nasdaq.

A lot of the big names like netflix and others over 100% on the year.

Right now we are just to head into earnings for the first quarter and i think investors want to see if we will see growth rates continue for the back half of the year.

I think it is time to wait and take a breather.

I think we will need to see earnings that the current valuations are still good.

The valuations are still high.

Netflix training at 140 times earnings.

The p/e ratio not necessarily how you want to value a tech stock.

Nonetheless, 700 times earnings gives me'. freak actual return is the way you want to value any stock.

I think what we have seen is linkedin, amazon, netflix notwithstanding, i think we have seen chasing down the yield curve, investors going after return anywhere that they can find it.

Willing to power much greater risk in places like solar, 3-d printing.

Electric cars.

Social media.

Tremendous excitement about the new things because there is hope you will be yield there because it does not exist anywhere else in the market.

Likes willing to do just about anything for growth.

We will talk about it later in the show.

Investors chasing the companies that have the promise of something because they want to be first there, the chance to cash in on whatever the next big thing is.

19 billion for whatsapp, it is like it is not real money.

I do not know that people truly believe they are investing in the next big thing.

Let's not get too excited.

Nasdaq of 13% this year with a spectacular return for three months.

The last year for the nasdaq, i think investor would take that kind of return.

Maybe more to the point, 27% gain in the nasdaq is spectacular.

More to the point that people are chasing returns are chasing them.

I do not think they fundamentally believe everyone will have a 3-d printer at their desk next year but chasing an investor return.

I agree.

Everyone is looking for the return.

3-d printing has been very hot the past few months.

But one thing that has happened is smart growth -- smartphones have been a huge tech driver.

We know growth is flowing there.

One thing happening right now is we see investors look or other areas like wearable computing.

Samsung will introduce the next wearable watch this year.

We think apple will do something that ball in this category.

You mentioned whatsapp that facebook bought oculus.

By the way, oculus does not even have a product.

Not coming out until summertime.

The point is, investors are looking for the next big category.

For now, everyone taking a pause.

I think you can return to bullishness again if you see consistent guidance.

What are the ramifications for the rest of the market.

Two additional points we have not discussed.


Huge amount of tech ipos coming out of china.

Those things are being marked down.

Secondly, and most importantly, we have the fed pulling back on kiwi and perfectly natural for the high flyers the market to be the first race but -- reflect the slow look -- with drawl of liquidity.

Tech has been a leader for the rest of the market.

Over the past month it is leading the market down.

That means less liquidity.

The things that have run the most, most aggressive hummus storied stocks will feel that most immediately.

Therefore, this pullback is very minor to date.

Could go down a lot further without even blinking.

It probably is healthy.

The question for the broader market is it tech will not be the leader as it has been, what will be the leader?

That is why i struggle with the market that will be led by utilities and materials and that is why people were talking about the rotation into the laggards such heirs.

I do not see a market relative to the whole world if we will be led by the utilities.

Even with the taper, you said a pretty active fed and keeping interest rates at zero for the foreseeable future.

That pushes people out on the risk curve and pushes them to find better sources of growth.

That is the flip side of the argument.

With china collapsing more big issues with growth in china and the big offering of shares of alibaba alone, that alone could suck capital out of the market.

When you talk about the highfliers seeing a sellout, you can see specific stocks.

The market did not seem to care when they put a crummy quarters.

All this and you see that's not coming off quite a bit.

That shows you the risk was ignored through january.

That has changed a bit.

Ryan talked about we had to sing strong -- brian talked about weird to see strong results.

We have seen really strong result that companies like ibm and oracle.

Some of the stocks have traded up.

Good things to say about june quarter growth.

Seeing a lot more traditional approach to growth.

The reason why the market will focus on earnings, cousin no longer has the fed backing it up to the same extent it has.

The fed pulls back.

Earnings become more important.

Starting to move back.

If you are in a fundamental environment.

And are not earning the money, maybe you back off of that?

Especially if you're up 300%. of course.

We see that and a lot of small cap tech names where growth is not expected for two or three years out.

Investors say i'm not paying for that right now.

Lex the question is when do we see exogenous risk factor?

When do we see something really year to that comes in like a ukraine issue or high-frequency trading suddenly yanking the plug?

What kind of thing doing not see coming that at the time of the markets is going to care about results at a time when the fed starting to pull back and maybe has more pullback yet to come amid that is when the outside risks loom larger.

Today it is not really the fear.

The issue today is the u.s.. emerging markets are up today.

Emerging market debt is up today.

Look at china, it is up.

The issue for today is u.s. tech.

Thank you.

Coming up next, the crisis in

This text has been automatically generated. It may not be 100% accurate.


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