Market rotation has its costs.
Institutional investors have been aggressive net sellers of tech stocks for 10 of the last 11 weeks, offloading approximately $8.5 billion in equities, mostly in hyperscalers and memory chips. The Korean index proved, as we suspected, a canary in the cold mine on that trade.
At the end of June and into early July, hedge funds got in on the act, engaging in their largest net sell-off of U.S. tech stocks in a decade.
The recent weeks’ sell-off was part of a larger pattern in which both institutional and hedge fund managers used a pervasive “buy the dip” mentality in stock market culture to offload single stocks and ETFs onto retail buyers.
Retail investors didn’t get the memo.
Until yesterday.
Once retail investors stopped buying any perceived dip in the market and decided to sell shares themselves, the selling reached a pace last seen in 2020 during the outbreak of the pandemic:
Retail investors finally became sellers of stocks, with a pace of selling yesterday that rivaled the Covid sell-off in 2010. (Source: VandaLabs)
During yesterday’s rout, the Nasdaq fell 10% from its recent highs, officially entering correction territory. Many individual stocks, particularly those tied to the AI trade, are down 50% or more.
That’s not unusual. It may not even be a sign of a market crash or a recession. It is a violent repricing – lower – the irrationally hot tech sector.
Even retail investors are now increasingly skeptical of the AI space, particularly its cash flow. And rightly so.
Following its earnings report yesterday, Meta Platforms (META) got punished for its still-growing AI spend. On the other hand, Microsoft (MSFT) was rewarded for capping its AI spending and maintaining its cash flow guidance.
Individual investors with a wild streak will have better opportunities in the coming months to buy back into high-growth names. But beware, August and September can be brutal to the market as a whole, particularly in midterm years.
Today’s Grey Swan Pro looks at an ETF focused on a basket of companies with low beta – meaning they tend to move at a much slower pace than the overall market. Low beta stocks also tend to offer decent income as well, which this fund offers in a monthly distribution — details here.
~ Addison
P.S. It’s not too late to review our latest research…
On Monday at 1 p.m. ET, we revealed a staggering opportunity we discovered after poring through President Trump’s financial disclosure released June 30, 2026.
The President, it turns out, has 114,750,000 shares of one stock tucked away in a private trust. A single company on the Nasdaq that could make him the richest man on the planet. And from our vantage point now, he’s steering national policy directly toward those very shares.
No sitting president, in 250 years of the American presidency, has ever – so transparently – piloted the West Wing into positive investment gains. Until now.
We’ve got a special replay lined up for you in case you missed it here.
And today at a special time, Grey Swan Live! returns with Shad Marquitz, showcasing the latest developments in the resource space.
As always, Shad brings a depth of research into the commodity space, specifically resource firms that fly well under Wall Street’s radar. Shad has selected five tickers to share with us this week.
