Is Nasdaq’s Reign Coming To An End?

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As our regular readers are probably aware, Nasdaq is the index that measures the performance of stocks and shares in the technology sector.

If you own any stocks or shares in Nasdaq tech companies, you may wish to consider selling them within the next few days. It might seem surprising, but it’s probable that Nasdaq will take a fairly severe downturn in the near future.

Nasdaq 2018

While the FTSE 100 and other major indices have been fairly volatile throughout 2018, Nasdaq stocks and shares have fared reasonably well overall. The tech sector doesn’t seem to have been as drastically affected by Brexit, the US/China trade war and other major political phenomena as other sectors.

Regardless of the reasons for Nasdaq’s modestly successful performance, it can’t escape the effects of economic uncertainty indefinitely. According to analysts at the investment firm Morgan Stanley, Nasdaq could be about to lose a significant chunk of its value.

Morgan Stanley

Recently, a high-ranking Morgan Stanley analyst named Michael Wilson warned that Nasdaq could soon lose about 15% of its current value. Speaking on the US television program ‘Trading Nation’, he argued that almost every single market sector within the S&P trading index had experienced a process of valuation correction that knocked 20% off their value. This hasn’t happened to the tech sector yet, but Wilson suggested that it might simply be the next in line.

In fact, Wilson thinks that the upcoming correction in Nasdaq’s valuation might be “the biggest since the one we experienced in February”. This is because there are a high number of growth stocks in the Nasdaq that have further to fall than static stocks or stocks that are losing value.

Buying Opportunity

Any potential correction could provide a useful entry point for anyone looking at tech stocks. Much of the recent market uncertainty surrounds potential trade wars, and certain tech stocks are more exposed to these risks than others. As ever, one investor’s crisis is another’s opportunity.