Speculative Stocks in Decline: Are Investors Aware?

Sharp Decline in US Stock Markets and the Impact of Speculative Stocks

The US stock markets experienced a significant decline on Tuesday, attracting the attention of investors. The most striking aspect of this drop was the volatility observed in more speculative financial assets. In particular, meme stocks that surged through social media and leveraged exchange-traded funds (ETFs) suffered serious losses in value. Additionally, cryptocurrencies and stocks in sectors such as lithium mining or nuclear energy also recorded substantial declines.

Roundhill Meme Stock ETF Hits a Low

Notably, the Roundhill Meme Stock ETF closed at a record low of $7.64, drawing attention. This ETF was reissued to the public last month after a similar fund was liquidated about two years ago. Moreover, Bitcoin, the largest cryptocurrency in the market, briefly fell below $100,000 on Tuesday, losing more than 20% of its current record level.

Evaluations from Leading Investors

Andrew Slimmon, the head of Morgan Stanley Investment Management, has expressed satisfaction with this decline. Slimmon stated, "The declining assets were inherently too speculative." He also mentioned that this market decline was particularly influenced by loss-making technology stocks and leveraged funds. He emphasized that there was a 'flight' in these stocks following past statements by Fed Chair Jerome Powell.

No Panic Observed in Markets

Farzin Azarm, Managing Director of Equity Trading at Mizuho Securities, stated that despite the 8% drop in loss-making technology stocks and the sharp sell-offs in the nuclear energy and lithium sectors, he did not observe panic signs in the market. He pointed out that the pullback in cryptocurrencies has caused some concerns among retail investors. However, according to Azarm, despite the selling pressure on large-cap technology stocks and speculative assets, the market is generally exhibiting a healthy attitude.