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TLDR: Nasdaq had its worst day since April 2025 and I think it falls further this year. Market's expensive (P/E \~35+ vs a healthy 25) and rate hikes are coming (BNP Paribas sees 3 from December). Rising rates pull money out of stocks into fixed deposits → selling → lower prices. Own strong, high-quality names (Amazon, Google, Apple, Nvidia; Micron over SanDisk), dump the 100x-P/E no-revenue froth. AI cycle and economy are real; the froth isn't.
Worst day for the market since April 2025. Nasdaq down \~4% in a single session.
Will it come down more? **Yes.** When? **Within this year.**
Here's the why, and what I'm actually doing about it.
**1. The market is expensive.** The Nasdaq is trading at an average P/E north of 35 (around 37 right now). That means the average company is priced at \~37x its earnings. Historically, a healthy number is closer to 25–30. Above 35 isn't "fair," and it isn't "cheap on a dip" — it's expensive. Full stop.
**2. Rate hikes are coming.** The banks have turned hawkish — BofA now sees no cuts and a higher-for-longer path, and BNP Paribas is openly calling for **three rate hikes starting December**. And here's the mechanism people forget:
When rates go up, money leaves stocks. Not everyone makes 20% in the market — plenty of people make 4–8%. If a fixed deposit pays them a solid, risk-free return, why would they stay in something this risky? They won't. They sell their shares and park the cash in FDs. Multiply that across millions of people and you get real, persistent selling. That's how prices come down.
So what do you do?
**Stop holding super-expensive, frothy stuff.** Anything at 100x earnings with little or no revenue — a lot of the optical/photonics hype names, the Coherents, Intel, AMD, Cornings of the world (v high P/E) — I'd be very careful. It is not the time to hold them.
**Own only high-quality, strong companies** — the ones with the steel to take the weight of a falling market. For me that's names like **Amazon, Google, Apple, Nvidia.** Even in memory, I'd rather hold a **Micron** than a NAND name like **SanDisk** — the weaker name falls harder.
And to be clear, I'm not bearish on the story. **The AI cycle is real. The economy is real and it will sustain.** The Broadcom wobble is a blip, not the end of the trade. But froth is froth — it does not survive a rate-hike tape. Quality does.
Hold the steel. Cut the froth.