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Tags: market | tech | biotech | IPOs

WSJ: Selloff in Tech, Biotech, IPOs Will Have Little Impact on Broader Market

By    |   Monday, 21 April 2014 02:58 PM

The recent skid encountered by previously booming technology stocks, biotechnology stocks and initial public offerings won't have a big effect on the overall stock market, investors told The Wall Street Journal.

The technology-heavy Nasdaq Composite index stands 6 percent below its 13-year high of March 6, but the S&P 500 stands only 2 percent below its April 4 record high.

In a commentary last week obtained by The Journal, analysts at BCA Research asked, "Does the recent mini crash in the high-valuation sectors signify the beginning of major trouble on Wall Street?"

Editor's Note:
38 Trades That Could Turn $1,000 Into $49,000


Their answer was no. "Such localized shakeouts are an inherent part of any bull market," they wrote.

The toils and tribulations of momentum growth stocks won't affect demand for blue chips, some investors say. Many anticipate stronger economic and earnings growth.

Meanwhile, investors are shifting to value stocks from growth stocks.

"Everybody decided they had too much exposure to tech and biotech at around the same time, apparently, and that they needed to trim by the end of the first quarter," Alan Fournier, who runs hedge fund manager Pennant Capital, told The Journal.

Nobel laureate economist Robert Shiller of Yale University argues that while stocks are expensive on a valuation basis, you should still own them.

"We're just not living in the best of times," he told Yahoo. "Momentum is weakening in housing, stocks look overpriced, bonds are paying poorly. There's risk there too. There's no easy way to win in this market, so I'm thinking you have diversify and keep something in stocks."

Editor's Note: 38 Trades That Could Turn $1,000 Into $49,000

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StreetTalk
The recent skid encountered by previously booming technology stocks, biotechnology stocks and initial public offerings won't have a big effect on the overall stock market, investors told The Wall Street Journal.
market, tech, biotech, IPOs
278
2014-58-21
Monday, 21 April 2014 02:58 PM
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