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People are always happy to find a reason for a big drop in a stock.

Getting Out
BEA slides in sympathy

Ask any trader why e-commerce software company

BEA Systems


dropped 10% today, she'll tell you it was sympathy pains for



, a competitor that got taken off of the

Chase H&Q

focus list and got clocked for 10.5%. Ask why

Network Appliance


got hit for 4.5%, and you'll hear about how



is about to come out with a competing network storage system. Ask why EMC dropped 4.4%, and you'll probably get a reason for that, too.

The Myth of Execution

But step back and it seems like something bigger is going on. Name a highflier that wasn't taken apart in recent weeks and it probably got taken apart today. And unlike other recent selloffs, this one really didn't have any event to ascribe it to. There's no indication that BEA has done anything but execute flawlessly.



, down 10.3%, has done no wrong. The only problem with any of these companies is that their stocks trade at extremely rich multiples. And investors don't seem to like stocks with rich multiples anymore.

Nasdaq's late Thursday snapback

This is a change. Earlier, when a highflier misstepped, investors would take down its sector but leave other hot areas unscathed. So cell phones tanked, but semiconductors hung in there.



whacked the chips, but the optical sector hung tight.

But somehow, yesterday's selloff in optical equipment makers on the failure of



to continue to expand revenues at a viral rate prompted some soul-searching that hasn't happened before.

"People are just looking through their portfolios and asking, 'If I can wake up and have Nortel miss, then what else can happen?'" says Seth Tobias, manager at the New York-based hedge fund

Circle T Partners

. "What you're seeing is multiple compression across the board."


"People don't want to pay ridiculous multiples anymore," agrees

Miller Tabak

strategist Peter Boockvar. "It's a change in psychology."

Yet even as investors sold these last highfliers, they moved into other tech stocks that have already been knocked down. "I can buy



at 20 times earnings and sell something else at 1,000," is how Tobias characterizes the shift.

Perhaps that's a good sign. Investors going after high-multiple stocks for no reason at all, except that they hadn't been hit yet, may have represented a final wringing out of excess in the market. Perhaps that's why the


, after being down nearly 150 points, was able to turn around at the end of the day and finish up 42 at 3272.