I DON'T LOVE YOU ANYMORE

           In1964, Charlie Souvin recorded this song about a lover who cheated on him. He qualified this by singing that he didn't love her any less. This reminds me of the love affair the stock market has been having with some fast growing stocks lately. For the past week, investors and traders have fallen out of love with these names, so much so that the NASDAQ exchange has entered correction territory by declining about 10%. Wallstreet darlings like Facebook, Apple, Netflix, Amazon, Tesla, and many other tech companies have been taken to the woodshed and spanked. Corrections are a natural method for an overheated sector to return to more earthly valuations. It should not suprise anyone who even casually watches this market that some of these tech stocks have gotten ahead of themselves. Some recent IPO's are currently trading at price/sales ratios in the thousands or more. I realize that young companies need capital and may not be profitable for years because building a business is expensive but for every one that becomes successful and profitable there are a hundred that fail. I will leave that huge risk for others, there are too many profitable companies that trade at reasonable valuations for me to invest in. While the NASDAQ is tanking, the Dow and S&P are going up. This tells me that a rotation is underway where Financials, Industrials, and Cyclicals are in demand. There are several reasons for this change of sentiment: First, interest rates have recently gone up dramaticaly on the long end, second, the huge amount of liquidity in our economy has created a bubble in the tech sector, finally, there is a movement toward value stocks vrs growth stocks. I have always been a value investor at heart. Dividends and a below market P/E ratio are important to me. Unfortunatley, value has been out of favor for a long time, however, it is coming back strong. I have to admit that I have fallen into buying some growth names just to participate in this bull market but after this week, I don't love them anymore.