"Incredibly Dangerous Days": Analysts Share Strategies for Navigating a Falling Market

During the sell-off in the technology sector on November 5, the Nasdaq Composite plummeted 5.2%, the S&P 500 fell more than 4%, and the Dow Jones dropped 3.3%. Investors accelerated the reallocation of capital away from the tech sector amid concerns about a slowdown in data center construction. Analysts’ opinions on how investors should behave in a falling market are divided: some say the AI rally is coming to an end, while others advise buying tech stocks on the dip.

— What’s happening in the market on Thursday is the result of a situation where stocks are rising due to euphoria and hype rather than fundamental indicators, according to David Bahnsen, founder and chief investment officer of The Bahnsen Group. According to him, the sell-off also served as an important reminder that the S&P 500 broad-market index has “too high a concentration of technology stocks,” Bloomberg reports.

“Rather than trying to guess when this tech stock sell-off will end, we’d prefer to avoid it entirely and focus on more defensive market segments, such as consumer staples and energy stocks,” Barron’s quotes Bansen as saying. These sectors may be less attractive, but they provide stable cash flows and include companies that have consistently increased their dividends over many years, the expert noted.

— “The widespread sell-off of AI-related stocks is far from over,” according to a note from Macro Research Board strategists cited by CNBC. The researchers noted that “investors are beginning to question overly optimistic forecasts for future earnings.” Against the backdrop of the stock market’s overall vulnerability, analysts recommend diversifying portfolios by reducing reliance on tech stocks.

“Under these circumstances, we expect U.S. and global stock indices to generally fluctuate without a clear trend (at least for now), however, within the market, there will be a significant reallocation of capital between sectors and individual stocks (including noticeable divergences in their price movements),” the strategists said.

— "The 'end of AI investment as we knew it' has likely arrived," wrote Citrini Research, an independent analytics firm, on Wednesday, November 4. The firm gained notoriety for a report on the disruptive impact of AI on the economy, released in early 2026. The firm now recommends that investors reallocate capital toward stocks of “boomer software” developers (long-established market players), as well as financial, entertainment, and energy companies, according to MarketWatch.

— “I don’t think AI is over yet,” said Larry Adam, chief investment officer at Raymond James, on CNBC. In his view, the ongoing development of AI infrastructure will continue for at least another year, according to Seeking Alpha. Adam views the current price decline as a buying opportunity. He noted that shares of some AI-related companies and semiconductor manufacturers are trading at a 30% discount to their historical levels. He also pointed to favorable corporate earnings forecasts, which continue to be revised upward. In his view, this indicates that companies’ fundamentals remain strong despite investors’ concerns.

Adam recommended that investors consider reallocating capital from healthcare stocks—whose valuations he described as the highest in the past 20 years—to the technology sector. “In fact, I would take this opportunity to gradually return to investing in the technology sector,” he said.

— “These are incredibly dangerous days for the market,” Jam Karsan, founder of the investment management firm Kai Wealth, told The Wall Street Journal. According to him, he has purchased complex derivative financial instruments, including options linked to the VIX volatility index calculated by Cboe, options on the S&P 500 index, and credit default swaps (CDS) in the bond market. The investor is confident that these instruments will generate a profit for him in the event of a sharp rise in volatility.

— Daniel Newman, CEO of Futurum Group, sees the sell-off as a buying opportunity, as the fundamentals of AI-related investments remain strong: according to him, most companies are issuing optimistic forecasts in addition to posting high profits. “You’re buying high-performing companies at a discount, and they’re expected to grow significantly over the next few years,” Newman said in a Barron’s article. However, this strategy is only suitable for long-term investors, not those seeking quick profits, as the AI sector could fall even further than it has now before a recovery begins, Newman warned.

“Every time you try to buy something right in the middle of a brutal sell-off or a major market correction, you may experience more pain before it pays off,” — agreed Baird investment strategist Ross Mayfield, who is also quoted by Barron’s.

This article was AI-translated and verified by a human editor