Market Insights with Eric: Episode 41

The AI sector had a Thunderstrike

What took place on Monday – AI company out of China for a fraction of the cost of what the US titans are producing, some of the biggest names in the US stock market falling by as much as 20% in a single trading day

Takeaways and implications:

• Context Matters: The tech sector declined on Monday, but the broader market remained stable. These drops follow significant prior gains and are part of a normal pullback.
• Valuation Risks: Tech stocks are trading at historically high valuations, making sharp declines more common. Similar patterns occurred in the Biotech sector and the dotcom bubble before major corrections.
• Avoid Emotional Investing: A pullback isn’t a buy signal—stay disciplined, analyze carefully, and consider historical trends before making investment decisions.
• Diversification is Key: Maintain exposure to strong-performing sectors but ensure broad diversification to smooth returns and stay aligned with long-term goals.

Great Valley Advisor Group is excited to present the latest episode of our video series featuring our Chief Market Strategist, Eric Parnell, CFA. At under 3-minutes each, these bi-weekly videos are meant to provide concise observations on relevant economic indicators to strengthen your knowledge and understanding of current market trends.

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Eric Parnell is solely an investment advisor representative of Great Valley Advisor Group, and not affiliated with LPL Financial. Any opinions or views expressed by Eric Parnell are his own and are not those of LPL Financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth may not develop as predicted.

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