There is a bear market sequence likely to take place in technology because the excesses were bigger than anything that I've seen. The bear-market sequence will most likely play out in steps. The first step is that big, initial market break, and that is probably complete. Second, there's normally a rebound from that first descent for a month or two, and we're already seeing that. Then comes the third and final phase.
Trouble comes, then investors jump in expecting that it's onward and upward again.
But I don't think it's going to work out so neatly for tech this time, because the excesses were so extreme. When we've had very big breaks in the markets, we've eventually gone into long periods of redemptions in mutual funds. I think this will happen with technology. Even though the Nasdaq has seen something of a rebound, AMG fund-flow data showed that people were redeeming tech funds just prior to the current recovery rather than pouring money into them, as they were in the first three months of the year. What's been going out of favor over the past two years has been value investing.