The Fall of 2026 Is Starting to Resemble the Spring of 2000

Avatar photo Doug Kass on October 16, 2026

* But there are important differences which will likely produce more muted downside to the hyperscalers and more muted upside to consumer staples…

“History doesn’t repeat itself, but it often rhymes.”

– (Attributed to) Mark Twain  

The U.S. stock market is starting to look like the spring of 2000 when the dot-com boom came to a halt and technology began a steep slide. At the same time, consumer non-durable (staples) stocks  (as well as Berkshire Hathaway ($BRK.A $BRK.B) have began to perform well both absolutely and relatively.

There are, however, deep differences in both periods of time.

* Today’s large-cap technology stocks (as opposed to the dot-com stocks) have deep moats and though their commitment to massive AI spending has transformed some of the tech equities from capital light to capital intensive, they have maintained  strong operating and profit profiles. Unlike 26 years ago, the Mag 7 represents a large percentage of the indices — which, amid a backdrop of passive products and strategies (ETFs, quants), means that investor inflows go into and directly/steadily support/buoy the shares of Nvidia ($NVDA), Amazon ($AMZN), Microsoft ($MSFT), Alphabet (GOOGL), Micron ($MU), Sandisk (SNDK) and Meta ($META).  

* Today’s defensive consumer staples have faced the competitive threat of generic and unbranded products over the last 15 years. In more recent years, they’ve encountered the introduction of GLP-1 agonists (a new class of medications that can help manage Type 2 diabetes and obesity (by reducing appetite). Unlike 26 years ago, a combination of these two factors are pressuring consumer staples’ top and bottom lines.

As  a result of these differences, the downside to the Mag 7 constituents (and memory and semiconductors) is much more muted than 2 1/2 decades ago (vis a vis dot-com ‘ers). And the upside to the classically defensive consumer non-durables is also more limited than 2 1/2 decades ago.

Importantly, given the rise in the risk-free rate of return (using the 10-year Treasury note) to almost 5.3% suggests to me that rather than find a home in the consumer staples space, it is more likely that market participants will seek refuge in fixed income.

Tactics

Though hyperscalers and semis/memory stocks are beneficiaries of a changed market structure, we own no large-cap tech stocks (and are short some on the periphery of Mag 7) because of our AI reservations and concerns. (See our 260 issues of the  “More Tales From Nvidia” series).

We have previously taken a position in consumer staples — Kimberly-Clark ($KMB), PepsiCo ($PEP), Coca-Cola ($KO) and Procter & Gamble ($PG). But, given the profit threats, we have treated the space more as “trading sardines” and have recently trimmed all four on strength. (Earlier in the week we got lucky and sold the sharp ramp in PEP shares and sold out of the very small balance yesterday on news that KFC has ditched PepsiCo for Coca- Cola.)

Position: Long KMB (VS), KO (VS), PG (VS)

Upside, Downside Movers in the Morning

Avatar photo Doug Kass on October 16, 2026

Upside

– $TCRT +25.0% (extends its surge after closing a PAH-focused biotech acquisition and securing about $350M of financing)

– $NCPL +19.0% (regains Nasdaq minimum-bid compliance)

– $SITC +18.0% (declares a $3.00 special cash distribution after an asset sale and plans to delist from the NYSE)

– $FFR +9.0% (launches the $2,490 FF Nova humanoid robot and outlines a proposed roughly $200M robotics combination)

– $ASM +6.5% (Roth/MKM upgrades to Buy from Neutral and raises its target to $8)

– $SMTC +4.0% (raises Q3 sales, operating-margin and EPS outlooks at its data-center analyst day)

– $TSLA +3.0% (unveils a redesigned Roadster featuring rocket-style thrusters)

– $STLA +3.0% (better-than-feared Q3 shipment update showed consolidated volumes down just 1% year over year)

– $FRO +3.0% (tanker shares rebound as geopolitical disruption continues to support shipping rates)

– $RBRK +3.0%, $VRNS +2.5% (cybersecurity names rise after VRNS agreed to a $6.3B all-cash acquisition)

– $NOK +2.5%, $AAOI +2.0% (networking and optical names gain after SMTC raised its data-center outlook)

Downside

– GUTS -53.0% (REMAIN-1 met its six-month co-primary endpoint, but 5.1% weight regain versus 8.2% for sham and a still-pending one-year co-primary fell short of elevated expectations)

– $JAGX -29.0% (special preferred-stock dividend was paid, with each preferred share set to convert into five common shares on November 2, intensifying dilution concerns)

– $MDXH -17.0% (suspends FY revenue guidance after preliminary Q3 revenue of about $22.7M)

– $TLK -15.0% (Indonesia ADR slumps after a warning that the country could face an emerging-market index downgrade)

– $CRWV -5.0%, $IREN -3.5%, $NBIS -2.5% (AI-infrastructure names extend their selloff on debt-funded buildout and profitability concerns)

– $TRV -4.0% (Q3 beat with lower-than-expected catastrophe losses, but shares sell the news after elevated expectations)

– $SKHY -3.5%, $SNDK -2.5%, $MU -2.5%, $ALAB -2.5%, $WDC -2.0%, $AMD -2.0% (chip and storage names weaken as the AI trade de-risks amid higher-rate concerns)

– $IONQ -2.5%, $ASTS -2.5% (speculative long-duration growth names weaken as rate-hike expectations rise)

– $MSTR -2.5%, $HUT -2.0%, $CRCL -1.5% (crypto-linked shares trade lower amid broad risk-off positioning)

I See Tail Risk to the Left and to the Right

Avatar photo Doug Kass on October 16, 2026

* But more to the left!

The volatility of certain sectors demonstrated yesterday — particularly semiconductors and memory — is growing extreme and (to be honest) I am not sure what it portends for the near or intermediate term.

I do know when Micron ($MU) trades down to $858 and closes at $931 (+$17 on the day) and Sandisk ($SNDK) trades down to $1,276 and closes at $1,391 (-$12) such wide intraday swings render trading difficult to impossible.

This extreme intraday volatility has become routine in a market that now more resembles a casino than a capital market.

As would be said on “American Bandstand” — I give it a 78 I am not sure of the beat but it’s hard to dance to.

American Bandstand – Record Review Beatle Edition

This sort of extreme volatility likely indicates a lot of uncertainty and depending on your risk appetite and profile, most should pass on trading these stocks. And if you are trading the QQQs one might reconsider VAR (“value at risk’) and reducing the size of your trading (and investing) positions.

I know I am.

Position: None 

Upside, Downside Movers in the Morning

Avatar photo Doug Kass on October 13, 2026

Upside

– $VFC +4.0% (Piper Sandler and Truist upgrade as signs of Vans stabilization improve turnaround confidence)

– $GS +3.0% (Q3 beat, led by surging equities revenue and stronger investment-banking fees)

– $UNH +2.5% (Q3 beat and 2026 adjusted EPS outlook raised to at least $20.50)

Downside

– $SNDX -17.0% (MAXPIRe Phase 2 axatilimab trial in idiopathic pulmonary fibrosis missed its primary endpoint)

– $S -7.0% ($1.25B convertible senior-notes offering raises dilution and stock-supply concerns)

– $WDC -6.0% (UBS cuts its target on hard-drive capacity and pricing uncertainty, compounding the storage-sector selloff)

– $SNDK -6.0%, $STX -5.5%, $MU -3.5%, $MRVL -2.5%, $AMD -2.0% (memory, storage and chip names slide as reported CXMT advances intensify China-competition fears)

– $JPM -3.5% (Q3 EPS and revenue missed as fixed-income trading weakened despite stronger investment-banking fees)

– $DPZ -3.0% (Q3 beat, but US same-store sales growth slowed sharply, raising demand-recovery concerns)

– $JNJ -3.0% (Q3 beat, but medtech growth was soft and international device sales faced geopolitical disruption)

– $ADBE -1.5% (HSBC downgrades to Hold, citing open-source competition risks)

– $WFC -1.0% (Q3 EPS beat, but revenue and net-interest income missed expectations)