Economy

The Irrelevant Investor: New Lows

The stock market’s renewed decline in recent weeks has sent stocks to 52-week lows on average. For some companies, the selloff has been considerably worse.

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  • Those companies that benefitted from the pandemic have fared worst of all. Many are down 80 percent or more from their highs. And some could even be bargains either at today’s level or in the next few months.

    While the market decline has been painful for anyone long the stock market, there is some good news thanks to the drop. The price-to-sales ratio of the small-cap heavy Russell 1000 index is back to pre-pandemic levels.

    For more value-oriented investors, other metrics are showing signs of getting back to reasonable prices as well.

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    Most of that change in valuation hasn’t come from a drop in value stocks. Rather, it’s from the rapid decline in tech stocks that have caused this valuation.

    While the lows may not be over yet for this current market decline, there could be some good entry points ahead for investors.

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  • The speed of the current decline, particularly in once high-flying tech, suggests investors should hold off on buying growth names right now. It may be more prudent to wait until a more definitive bottom is in. Or even a definitive move higher.

    To see the full blog post showing the top charts for this selloff in tech and growth names, click here.