Latest / Stock Picking with Fexingo: Individual Equities, Research, and Building a Concentrated Portfolio / How the Megacap Selloff Is Reshaping Value Investing in 2026
Transcript
- Lucas: So you look at the Nasdaq this week — down over three percent in five days. The S&P 500 off one point six percent. But the Dow is actually up a fraction. That divergence tells you almost everything about what's happening right now in late June 2026. Luna: Yeah, the old rotation narrative — except this time it feels less like a gentle shift and more like a re-rating of an entire investment thesis. Lucas: Exactly. NVIDIA down seven point seven percent in five days. Apple off four and a half. Tesla down over six. These aren't just profit-takers. This is the market questioning the growth assumptions baked into these stocks over the past eighteen months. Luna: And while that's happening, Berkshire Hathaway is up two percent. JPMorgan barely budged. Even ExxonMobil, which has had a rough month, is only down one point four percent over the week. It's a classic value versus growth split. Lucas: Right. And I think the question for anyone building a concentrated portfolio right now is whether this selloff in megacap tech is a buying opportunity or a warning that the regime has changed. The old playbook says buy the dip in names like NVIDIA and Apple. The new playbook might say those dips are the beginning of a mean reversion. Luna: Well, what's different this time? We've seen tech selloffs before — 2022, for example — and the megacaps bounced back stronger. Lucas: Two things. First, the macro backdrop. Minneapolis Fed President Kashkari said on Friday he expects a rate hike this year. That's not just hawkish — that's a direct headwind for long-duration assets like high-growth tech. Second, the earnings growth story is slowing. Microsoft's cloud slowdown, which we talked about a few episodes ago, is a canary in the coal mine. When the most reliable grower in the index starts decelerating, the market reprices everything. Luna: So if you're a concentrated stock picker, where do you look instead? The Dow is up — that's old economy, right? Industrials, financials, energy. Lucas: Financials are interesting. JPMorgan and Bank of America have held up well. Higher for longer rates actually help their net interest margins. And they're trading at single-digit price to earnings ratios with decent dividends. That's a combination that's hard to find in tech right now. Luna: But aren't financials also cyclical? If we get a recession, loan losses spike and those dividends get cut. Lucas: Sure, but the market isn't pricing in a recession right now. The Russell 2000 is flat over the past week, not down. Small caps are holding their own. That suggests the economy is slowing, not collapsing. And financials are actually one of the sectors that benefit from a steepening yield curve, which we're starting to see. Luna: What about energy? Exxon and Chevron are both down this week, but they've had a strong 2026 overall. Lucas: Energy is trickier. Oil prices have been volatile, and the sector is heavily dependent on supply dynamics from OPEC and geopolitical events. But the dividend yields are attractive — Exxon's yield is around four percent. For a concentrated portfolio looking for income and some inflation protection, energy makes sense as a complement to financials. Luna: So the thesis is: sell some of the megacap tech that's been bid up to extreme valuations, and rotate into value sectors that are still reasonably priced and offer income. Lucas: That's the idea. And I want to be specific about the numbers. NVIDIA is trading at around forty times earnings. Apple at about thirty. Meanwhile, JPMorgan is at twelve times earnings. Berkshire Hathaway at about nine times operating earnings. The spread is historically wide. Luna: But isn't that spread justified by the growth rates? NVIDIA's revenue is still growing, even if slower. JPMorgan's revenue is flat at best. Lucas: It is justified to some extent. But the question is how much. If NVIDIA's growth decelerates from fifty percent to twenty percent, the multiple should compress. That's what we're seeing now. The question for a concentrated portfolio is whether you want to hold through that compression or move into names where the multiple is already low and the business is stable. Luna: That speaks to the discipline of stock picking. It's not about being right about a company forever. It's about being right about the next twelve months. Lucas: Exactly. And that's why I think the current environment is actually a gift for active stock pickers. When everything is going up, you don't need to make hard choices. But when the market starts rotating — and it clearly is — you have to decide what you really believe in. Luna: And that's hard. It's tempting to just hold the names that have worked for the past few years. But discipline means sometimes selling your winners and buying what's out of favor. Lucas: Look, I'll be honest — I own some NVIDIA. I've owned it for years. And I'm not selling all of it. But I've trimmed. I've taken some profits and put them into Berkshire and JPMorgan. That feels uncomfortable because NVIDIA is exciting and Berkshire is boring. But the risk-reward is better on the boring side right now. Luna: I think a lot of our listeners are in the same boat. They've benefited from the tech rally and now they're wondering if it's time to rebalance. What's the one concrete thing they should do this week? Lucas: Look at your portfolio's concentration in the top five holdings. If more than forty percent of your equity allocation is in megacap tech, consider trimming to thirty percent or below. And put that money into something with a single-digit price to earnings ratio and a dividend yield above two percent. Even just one trade like that can change your portfolio's risk profile dramatically. Luna: That's actionable. And it's not about timing the top perfectly. It's about being disciplined when the market gives you a signal. Lucas: Right. And speaking of signals, the fact that SpaceX is joining the Nasdaq-100 is another sign of how tech-centric the index has become. That's going to force even more passive money into megacap tech. But for active investors, that might be a reason to lean the other way. Luna: Yeah, the passive inflows will be enormous. But that doesn't mean those stocks are good investments at current prices. It just means there's forced buying. Lucas: Exactly. And that's why stock picking matters now more than ever. When the passive wave is lifting everything, active managers have to swim against the current. But when the wave starts to break, active managers can find the real value. Luna: We talk a lot on this show about concentrated portfolios and the discipline of active investing. If that's been helpful to you in your own decision-making, we'd love it if you considered supporting the show. Lucas: Yeah, a couple of dollars a month is genuinely what keeps these going. You can find us at buy me a coffee dot com slash fexingo. It's a way to keep the show ad-free and independent. Luna: And we really appreciate every bit of support. It makes a difference. So back to the rotation — I want to talk about one specific value stock that's been on my radar. Lucas: Let's hear it. Luna: Cisco. It's not a sexy name. But it's trading at around fourteen times earnings, has a dividend yield of about three percent, and it's benefiting from the build-out of data centers for AI. It's not NVIDIA, but it's a steady grower in a sector that's growing fast. Lucas: That's a good example. Cisco is one of those names that gets overlooked because it's not a high-flyer. But it's generating real cash flow, buying back stock, and paying a growing dividend. In a concentrated portfolio, you want a few of those anchors. Luna: And it's a hedge against the AI hype. If AI is real, Cisco sells the networking gear that makes it work. If AI is overhyped, Cisco still has its enterprise business. The downside is protected. Lucas: That's the kind of asymmetric risk-reward you look for in stock picking. Limited downside, meaningful upside. And you can get that in a lot of value sectors right now — financials, energy, telecom, even some old-economy industrials. Luna: So bottom line: the megacap selloff is creating opportunities, but you have to be willing to look beyond the names that have dominated the headlines. Lucas: And you have to be willing to act. The worst thing you can do in a rotation is freeze. Even a small shift — five or ten percent of your portfolio — can make a difference over the next twelve months. Luna: Alright, that's a good place to leave it. Next episode, we'll dig into one specific value stock and build a full thesis around it. Lucas: Looking forward to it. Until then, stay disciplined.