Andrew Slimon, the chief equity portfolio manager at Morgan Stanley, warned against the temptation to rush into buying stocks, particularly high-growth stocks, following recent price declines. He stated, "Once the frenzy bursts, it lasts for a long time." He told Bloomberg, "If you rewind the clock and look at some growth funds that invested in Uber in early fall 2020, after the stock's downturn with the spread of the COVID-19 pandemic, many of them have not made profits."
Slimon likened recent declines in technology stocks to the internet bubble of the late 1990s, noting that there is significant resistance with each rise due to many losing their money. Once a speculative bubble that has been overpriced bursts, the decline does not occur in a V-shape as some expect, since many investors are looking to exit, according to information shared with Al Arabiya.
Slimon ruled out a repeat of the 2000 scenario with the same intensity, especially for the Nasdaq 100 index, pointing out that the difference is that many internet stocks were trading at triple-digit price-to-earnings multiples, whereas the current index is dominated by large technology companies whose stock valuations are not as exaggerated.
Slimon achieved a 36% return on the equity fund he manages, attributing the success to focusing on the fundamentals in selecting "the eggs he puts in his basket," having purchased value stocks—which are tied to economic cycles—many of which were trading at low levels. He identified the financial services and energy sectors as doing particularly well regarding business volume.
He expects this trend to continue in 2022, as economic policies indicate a new growth cycle, suggesting that value stocks, especially in the financial and energy sectors, will play a significant role. However, Slimon did not entirely overlook technology stocks, emphasizing his preference for companies like Alphabet (the parent company of Google) and Microsoft.
