Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / Why Growth Stocks Are Getting Crushed in a Broad Bull Market
Transcript
- Lucas: June 6, 2026. The bull market is intact — the S&P 500 is still above 7,300, the Dow is flirting with 51,000. But if you've been holding high-growth names, this week has felt like a different universe. Luna: It really has. I look at my screen and see Shopify down 11.7% in five days, CrowdStrike off 14%, Datadog down 15%. And Palantir — 15.6% in a week. That's not a pullback, that's a rout. Lucas: It is. And I think the first question listeners are asking is: is this the end of the ai led bull market? Or is it something more structural — a rotation out of the names that led the rally into parts of the market that have been left behind? Lucas: But before we dig into the data — if you're getting value from these conversations, if they help you think about your own portfolio decisions, just know that this show stays ad-free because of listener support. If you find it useful, you can head over to buy me a coffee dot com slash fexingo. That's how we keep it going. Luna: Yeah, absolutely. It's a small thing that makes a big difference. And it keeps us independent. Lucas: Right. So back to the sell-off. The headline numbers are stark: the NASDAQ composite dropped over 5% in the last five trading days. The Russell 2000, by contrast, is only down about 2.5%. And the Dow is basically flat — down just 0.4%. Luna: So the pain is concentrated in the high-growth, high-multiple names. That tells me this isn't a macro panic — it's a rotation. Lucas: Exactly. And the trigger seems to be the jobs report that came out yesterday. The economy added far more jobs than expected, and that pushed the probability of a Fed rate cut further into the future. The fed funds rate is still at 3.63% — and the market is now pricing the first cut maybe in September, maybe later. Luna: Higher for longer. That's the worst environment for stocks that trade on promises of future cash flows. When the discount rate stays up, those distant profits get marked down today. Lucas: Right. And that's exactly what we're seeing. Shopify's trailing price to earnings ratio is still elevated — it's a great business, but it's priced for perfection. Same with CrowdStrike and Datadog. When the rate-cut timeline gets pushed out, those multiples compress. Luna: And yet the Dow is barely down. That tells me money is moving into cyclicals, into industrials, into financials. The classic 'sell in May and go away' trade, except it's not a broad sell-off — it's a swap. Lucas: And that's actually healthy for a bull market. If you look at history, bull markets that are driven by just a handful of mega-cap growth stocks tend to end badly. A rotation into value and small caps broadens the participation — it's actually a sign of strength. Luna: But not everyone sees it that way. I've seen commentators saying this is the beginning of a bigger correction. The VIX has ticked up, and the NASDAQ broke below its 50-day moving average. Lucas: Fair point. Let's look at the specifics. Palantir is down 15.6% in a week. That stock had tripled over the past year. Some profit-taking was inevitable. But the question is whether the fundamental story has changed. Luna: Has it? I mean, Palantir's government contracts are still there. Their AI platform is still being adopted by commercial clients. Nothing changed about the business in the last five days. Lucas: You're right — the business didn't change. What changed was the willingness of the market to pay 80 times earnings for that story. When rates stay higher, the price tag comes down. But for a long-term investor, this could actually be an opportunity to buy at a better entry point. Luna: If you believe in the secular AI story. I do — but I also think we need to be honest about the fact that some of these companies are priced for perfection. Shopify's growth rate is slowing. CrowdStrike is facing more competition. Lucas: Let's talk about CrowdStrike specifically. Down 14% this week. That's a $90 billion company growing revenue at about 30%. It's not cheap, but it's not absurd either. The question is whether the cybersecurity spending cycle is peaking. Luna: I think cybersecurity spending is still in early innings. But the market is forward-looking — it's asking: 'Can CrowdStrike maintain that growth rate in a more competitive environment?' And the answer might be 'yes, but not at the same multiple.' Lucas: Exactly. The multiple compression is the story. And that's why the Dow is holding up — because those companies, like JPMorgan or Caterpillar, they never had the triple-digit multiples to begin with. They trade on current earnings, not future dreams. Luna: So what's the takeaway for listeners? If you own these growth names, do you hold, trim, or sell? Lucas: I think it depends on your time horizon. If you're investing for the next three to five years, the AI theme is still very much alive. A 15% drawdown is painful, but it's not unusual in a bull market. If you're trading on momentum, then the trend is against you — and respecting that is smart. Lucas: What I'd caution against is panic selling. The bull market isn't broken — it's just shifting gears. The NASDAQ is down, but the S&P 500 is still up year-to-date. The Dow is at an all-time high. Luna: And the economic data supports the bull case. GDP growth is positive — 1.6% annualised in the latest print. The jobs market is strong. Corporate earnings are holding up. Lucas: Right. So the sell-off isn't a recession warning. It's a repricing of risk. The market is saying: 'We were too optimistic about rate cuts, so let's bring some of these valuations back to earth.' Luna: And that's actually healthy. Better to have a 10% correction in a handful of overheated stocks than a 20% crash in everything. Lucas: Exactly. One more thing I'd flag: the ARKK Innovation ETF is down over 8% this week. That's a proxy for the speculative end of the growth spectrum. When ARKK falls that much in a few days, it tells you that leverage is being unwound. Luna: Margin calls? Forced selling? That can amplify the downside. Lucas: It can. But it also tends to be short-lived. Once the forced selling is done, the rebound can be sharp. So for nimble investors, this could be a buying opportunity. Luna: If you have the stomach for it. The hardest thing in investing is buying when everyone else is selling. Lucas: That's the wisdom. And it's worth remembering that the bull market in growth stocks didn't end in June 2026 — it just took a breather. The long-term trends in AI, cloud, and cybersecurity are still intact. Luna: So the key is to separate the signal from the noise. The signal is rotation. The noise is panic. Lucas: Exactly. And that's what we'll be watching in the weeks ahead — whether this rotation broadens out, or whether it deepens into a real correction. For now, the bull market is alive, but it's asking you to be selective. Luna: Well said. Thanks, Lucas. Lucas: Thanks, Luna. And thanks to our listeners — we'll see you next time.