The Nasdaq is in a delicate position today, a heavy silence reigns among investors, a sort of buyers' strike that seems to slow the momentum of the markets.
we are in the midst of a paralysis of the Nasdaq
This phenomenon is part of a broader dynamic, notably fueled by the instability of political decisions emanating from the White House. The current scene reminds me of a cult moment from the film "Ferris Bueller's Day Off": this passage where the economist Ben Stein questions his students on the effectiveness of the Smoot-Hawley Act customs tariffs. The answer was clear: no, they did not work, and the American economy sank further into the Great Depression. We are living a similar scenario today, where Wall Street and the White House seem to speak two incompatible languages.
Tensions between the United States and China
It is clear that we are operating in an environment dictated by these decisions. Take the trade tensions between the United States and China, for example. Apple, a Nasdaq giant, produces most of its smartphones in China. Any disruption in these relations directly impacts the entire technology sector. The challenge is to understand where this administration wants to go, what its real objectives are. And as long as this vision remains unclear, investment remains hesitant.
Some investors are panicking about the prolonged decline in markets. Fear is a natural reaction. But it is important to remember that corrections are an integral part of the stock market cycle. A 1% decline for seven consecutive days, as we have seen recently, may seem worrisome. However, declines of 5% or even 10% are not only normal: they are often necessary to clean up the market. A wise investor knows that pullbacks are opportunities. Buy low, sell high: that is the golden rule.
The Nasdaq was coming off an exceptional year in 2023 (+40%) and continued its strong growth in 2024 (+30%).
In hindsight, the answer seems obvious. We had entered a phase where the market was “priced for perfection.” But when a new administration takes office, uncertainty sets in, and a correction becomes almost inevitable. We are right in the middle of it.
Europe is indeed on the opposite trajectory to the United States.
In recent months, if not years, European markets have significantly outperformed their American counterparts. Our international funds have increased their exposure to Europe. However, when it comes to large technology companies, the fundamentals remain strong. The last quarter showed encouraging results, and the outlook for 2025 remains optimistic. The key is not to lose sight of this fundamental reality: beyond short-term turbulence, the intrinsic strength of companies always prevails in the end.
