Tech stock selloff deepens as DeepSeek triggers AI rethink

I don't see a problem. Index funds are precisely there to follow over and underevaluations, so that in the end the best mix gets out, tracking long term real value.

This also means, that the ones who got to sell at the high price get to reinvest that money somewhere else, which in a broad index fund, leads to increases in another place.

However this shows again that it is fatal to think of the market price as being an indicator for a companies worth. The market price only reflects the value of the currently sold stocks. If a large amount of stocks would be pushed onto the market or pulled from it, the price naturally goes up and down. But it is impossible to buy or sell an entire company at the current market price.

The sooner we stop basing economic decisions on the idea that the market price reflects the market cap and that would reflect the actual worth of a company, the less likely we would run into stupid decisions based on bubbles.

Volatility has always been built into investing, including index funds.

If retirement is a long way away, then this is a non event. If retirement is close and your 401k was in a target date fund, you are heavily invested in bonds at this point, precisely to deal with this sort of situation.

If you are close to retirement, and heavily weighed to tech heavy indecies, then this will probably delay your retirement a few years. If you're already retired and so invested, you may have a problem.

Honestly the funds fault. Tech companies are bound to fuck up and fall at some point.

While I understand your point here, but a 10% drop amongst tech companies should not be a huge drop for a properly diversified 100% stock based global index fund.

A 10% drop in general is expected for index funds, that's why you should have a long time horizon. If a drop of 50% is more than you can handle then the stock allocation should be lowered from 100% and bonds increased by the same amount. S&P500 is not enough diversification, not nearly enough. Funds that track MSCI ACWI is a lot better in terms of diversification, and diversification is the ONLY free meal in investing.

If retirement is years away, this is barely going to be a blip on the radar. Outside of a full blown depression, the market will recover. Hell, even after a depression, the market will recover if given enough time. If you had your entire retirement invested in a single sector or company, you deserve to lose 17% of it overnight tbh.