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This Week’s Market Recap… 📊

On Sunday night as I was writing my Monday morning blog, the Nasdaq was down over 1.5% and Nvidia was down over 5%. I was a bit confused why there was this sudden drop, and then I read about the “Better ChatGPT,” DeepSeek. 

I didn’t think much about it and went to bed. I woke up Monday morning and turned on Bloomberg surveillance to see the Nasdaq down over 4%, the S&P down over 2%, and Nvidia down over 12%. I was shocked at first, and then there again I saw the next great AI, DeepSeek. 

As the morning went on, you felt the panic on financial media and Twitter. People came on Bloomberg left and right and started to pose that this was the 1999 moment, and that the resurgence of the dot com bubble was here. 

As the day went on, the market continued to stay deeply negative. Nvidia continued to drop throughout the day and closed the day down 17%. They lost close to $600 billion in market cap in one day, the largest drop ever. 

As always, the bears came out of hibernation, pumped out their chests, and chirped all over Twitter and CNBC. This was the day the bears needed. After 2 years of constantly shouting doom and gloom about the market, their day and time was finally here. 

Over the last 2 years, as the Mag 7 pushed the market positive, many fund managers under performed. The classic Perma Bear’s like Nassim Taleb have claimed constantly over the last 2 years that the market is due for a massive correction. Of course, that statement was wrong as the S&P 500 rose over 20% each of the last two years.   

Monday was the big day that the bears have been preying on as their performance has drastically lacked the benchmark. On Tuesday I woke up, and just like that there is a Bloomberg article showcasing Taleb with the headline, “Nvidia rout is a hint of what’s to come.” Then there is a headline in the Financial Times of Ray Dalio stating, “Wall Street’s AI bubble echoes dotcom excesses.” Like clockwork, the Perma Bears were ready to chirp and chant doom and gloom upon the markets. 

The problem with the bears is that they are praying for any negative news possible to run with. If you let the narrative develop around DeepSeek, you would acknowledge that it is most likely going to help and improve tech and AI companies. The cost savings and efficiency unlocked by DeepSeek’s open-source model will limit costs for the Mag 7 and tech industry. 

On Tuesday, the market opened and Nvidia was up 8%, and the Nasdaq was up over 1.5%. On Monday, the market overreacted because of a new competitor into the AI race. Investors were able to digest the overreaction, and the market has since rebounded. 

If this can teach you anything about the current market dynamic, it is to not overreact. It seems that the market is on edge for every single piece of news or data that comes out. Overreactions are so prevalent, and it is important to stay calm, and to try to take advantage of these overreactions. I believe that the dip Monday was an incredible buying opportunity, and if we see any more massive overreactions in the near term, they will probably also be buying opportunities. As we continue to invest in this overly volatile market, it is important to stay calm and not overreact.   

As always, stay positive, get invested, and be optimistic. Thank you for reading!!

Have a wonderful weekend!!

Top ETFs on our Radar… 📈

The iShares Expanded Tech-Software Sector ETF has performed exceptionally well this year. Software companies have shown strong performance as investors seek to identify the next big winner in AI.

Tune in every Monday and Friday for in-depth Market Analysis, Recaps, and a featured Stock & ETF.

Thanks for reading and have a great week!

-Ryan

@Theinvestingauthority