Fear vs. greed: How investors should react to Anthropic-fueled market moves
US stocks (^DJI, ^IXIC, ^GSPC) are ending Monday's trading session higher after Anthropic (ANTH.PVT) released its S-1 document earlier this morning. The AI company plans to go public on the Nasdaq in mid-November under the stock symbol "ANT."
Sam Stovall, chief investment strategist at CFRA Research, talks with Brooke DiPalma about the feelings that may be shaping how investors react to this important event for technology stocks.
Sam, do you think this news gives the markets the confidence they needed to become optimistic about technology stocks again?
I think so. Technology stocks had done very well, and I think investors then wanted to take some profits. But we are also in a fairly favorable seasonal period for the market. October tends to be the best month of a midterm election year. We are entering the three strongest quarters of the 16-quarter presidential cycle. Another factor is that the market has never fallen in the 12 months after October 31 in a midterm election year. These are all positive signs, and I think investors do not want to miss out.
When you think about some of the companies Anthropic mentioned as customers or competitors, such as Google and OpenAI, what effect do you think this could have on OpenAI's IPO and on Google?
We think OpenAI may face more challenges in 2027, mainly because of all the money it needs to borrow to expand and cover other costs. I do not know many details about these stocks because I do not follow them individually. I can only share what Angelo told me. Basically, we are optimistic about Anthropic, but we do have concerns about OpenAI going public next year.
Sam, I liked your note. You said, 'Don't let your emotions become your portfolio's worst enemy.' At the moment, people seem excited and are rushing into the market because of this news. What do you mean when you say we should not let our emotions affect how we respond to this opportunity?
In my opinion, fear is a much stronger motivator than greed. One reason I believe this is that the market rises or falls by at least 1% on 45% of trading days during bear markets, but on only 15% of trading days during bull markets. Since adrenaline helps people remember things, some financial media outlets may try to get attention by saying, 'The world is coming to an end at midnight. Tune in tomorrow to see if it really did.' So I say, do not let fear push you to sell your stocks. It is amazing how quickly the market can recover to its previous level. After market declines of up to 20%, it has taken an average of only four months to get back to the starting point.