The Dow dropped 831 points led by a drop in tech stocks

Wealth Enhancement Group CIO says investors are getting real about their value

Dan Cook
October 10, 2018 - 6:23 pm

Dreamstime

Wednesday was a bad day for your 401k. The Dow Jones took an 831-point drop losing 3.2 percent of its value. The S&P 500 dropped 3.3 percent, it’s fifth straight day of losses. And the Nasdaq dropped over four percent.

Jim Cahn, Chief Investment Officer for Wealth Enhancement Group said a revaluation of tech company stocks drove the plunge.

“Tech stocks have really lead the rally in the US over the last couple of months.,” Cahn told Paul and Jordana, “When you start to look at the valuation on these names, they start to a little bit stretched.”

 “I think what the market is telling us is that there’s a mismatch between the growth expectations for these companies and what’s realistic in an environment where interest rates are over three percent.”

So how worried should investors be?

“That doesn’t mean the world’s ending,” said Cahn. “That doesn’t mean we’re headed for a recession. That doesn’t even mean the market won’t recover in the next couple of weeks.  But what it does mean is that these high-flying names are going to fly a little bit lower for a little bit longer.”

Hear the entire interview with Paul and Jordana: