How We Invest In a Falling Market
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What does the current correction in the Nasdaq mean for investors?
NASDAQ is officially in correction territory. So where are we doing now? Motley Fool Money starts now.
Everybody needs money. That's why they call it money.
From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. I'm Travis Hoyum, joined today by Lou Whiteman and Andy Cross. And guys, as of early Friday, the Nasdaq is down 12% from its all-time high. That actually happened in October, but the drop over the past couple of weeks has been pretty notable.
How are rising energy prices affecting the market outlook?
Now, that means we're in correction territory. 20% would be a bear market, I believe, if I'm getting my definitions correct. This is partly about Iran and oil prices, but it's also partly about questions about AI, lots of things going on. So Andy, when you look at this market overall, what do you think the market is seeing to have these big negative days? We're down 1.2% early in trading on Friday. Yesterday was a big down day. We're not getting earnings. So what's on the top of mind for investors?
Well, Trav, I think the start of the year, right, there was a little bit more of kind of, hey, how is the market shaping up with so much of the tech spending? There's just trillions going into data centers.
What challenges does the AI trade face in today's market?
And that pivoted very quickly towards the Iran war, the activities going on in the Middle East, and the impact on not just oil prices, but now I think more and more it's what are the ripple effects to those increases? Oil prices are going to percolate. If they stay elevated throughout the economy, How is that going to impact consumer spending? How is that going to impact investor appetite? And so I think the markets have started shifting as we're thinking, gosh, where is the value going to be? Not just for individual investors, but also for institutional investors. And so much of that capital now has started to flow a little bit more towards things like energy and materials in the marketplace, energy consumption.
is up more than 30% so far this year, but the overall impact into the market, whether it's a NASDAQ or just the S&P 500 for energy is relatively small. So you haven't really seen the impacts and that's been, even though the investing appetite has shifted,
How does historical market performance inform current investment strategies?
You haven't seen that show up in the general markets because energy is just such a smaller part of the investment landscape and of the indices. And technology is so much of a huge, big part of that part of the market. And that's money starting to flow out of there as investors get a little bit worried about, oh gosh, how much of this AI spending in data centers is going to be recouped because of the value for those dollars looking down the road. Where is the investor return going to be? So you're starting to see this market shift. And that is showing up in the overall indices and just some nervousness with the investor appetite going into 2026. And the rain war is certainly not helping.
So I want to put some numbers to that. The NASDAQ composite year to date is down 8.9% as we're recording. The S&P 500 is down 6.1%.
What stocks are currently on the radar of the hosts?
Is that part of that energy increase? allocation that you're talking about right the nasdaq is not going to be allocated energy whereas if you look at one of the things i like to look at recently is the heat map of the s p 500 if you do a year-to-date heat map of the s p 500 there are huge segments of the market a lot of the most popular stocks that we talk about all the time are down really big And then you got these small little boxes like utilities, like, you know, oil producers, ExxonMobil that are up huge. Is that what you're talking about? Is that just that allocation has not kind of balanced out because of the weights of the index?
Yeah, energy makes up three to four percent maybe of the index right around there compared to, you know, technology and financials. Financials are also not having a good start to the year just because of the interest rate concerns. So Yes, those parts of the market just aren't represented in the index. So you're starting to see those fall off.
What factors are influencing investor behavior in a falling market?
And of course, many fools out there, including myself, own a lot of technology stocks.
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Chapters
8 chapters
1
What does the current correction in the Nasdaq mean for investors?
0:05–1:00
2
How are rising energy prices affecting the market outlook?
1:00–1:39
3
What challenges does the AI trade face in today's market?
1:39–2:38
4
How does historical market performance inform current investment strategies?
2:38–3:26
5
What stocks are currently on the radar of the hosts?
3:26–4:16
6
What factors are influencing investor behavior in a falling market?
4:16–5:24
7
How do individual investors differ from institutional investors in market strategies?
5:24–6:13
8
What lessons can be learned from past market downturns?
6:13–39:20