This year’s stock market losses are piling up. S&P 500 stocks have lost $7.5 trillion (€7.22 trillion) in market value this year, according to Bespoke Investment data, following the worst start to a year since 1939.
Tech stocks have borne the brunt of the selling, losing some $3 trillion. Amazon is in the middle of its biggest drawdown since the 2008 crash, notes Ritholtz Wealth Management's Ben Carlson, while Facebook hasn't fallen so much since its first year as a public company.
Unsurprisingly, the tech-heavy Nasdaq is deep in bear market territory, falling almost 30 per cent.
Punishing as the declines have been, they are "but a flesh wound" compared with the market's high-growth stocks, says Compound Capital Advisors' Charlie Bilello. Drawdowns of 70-90 per cent have been common following the unwinding of the manias of recent years. Electric vehicle stock Rivian, fitness company Peleton, and plant-based meat alternative stock Beyond Meat are all down some 90 per cent.
The narrative, says Bilello, has gone from “everything is awesome to everything is awful”. Consequently, Peleton trades for less than one times sales today, compared with more than 20 last year.
For now, investors are focused more on the possibility of further falls than on bagging potential bargains. Stubbornly high inflation means the Federal Reserve "must tighten until it breaks the economy or the market", Bank of America recently cautioned. "Until it does, asset prices must reset lower."
