John J. Edwards III chatted on AOL MarketTalk on April 19. AOL's MarketTalk is hosted by Sage Online (Keyword: PF Live)

Sage MikeM:

Please welcome Sage Online's good friend, John Edwards of

TheStreet.com

! John, why have tech stocks gone down so much today?

JEdwards:

It's a continuation of a broad rotation that we've been seeing for the past few sessions, in which cyclical, economically sensitive stocks, are outperforming, while technology and other growth stocks have taken hard hits.

Question:

Is today's tech stock movement similar to the broad 1987 market decline? Is it simply a matter of stocks being too expensive?

JEdwards:

I think that's a large part of it. There definitely has been a sense that many tech stocks are very overvalued. Certainly that's been the perception of many of the internet stocks. And it seems that investors are increasingly betting on a significant change in the economic backdrop.

Question:

What would it take for Internet stocks to make a comeback?

JEdwards:

Well, the trading in Internet stocks has been so difficult to analyze on a rational basis that picking out exactly what might cause a rebound is especially difficult. I would say that certainly the next day or two will be extremely important in determining the real nature of this move in the Net stocks because, given the extreme downturn they have suffered, you would expect to see a bounce in the next couple of days given the way they've traded in the past.

Question:

The Dow was in an upward frenzy earlier today and then made an astounding drop. What psychology was driving investors?

JEdwards:

I think that there's a general nervousness among investors who are seeing a trend that they haven't seen in quite some time. That nervousness seems to have finally reached the Dow stocks and has caused people to try to quickly lock in the gains they've seen in the last several sessions.

Question:

To place things in perspective, have you seen this type of day before, and did the heavens fall?

JEdwards:

We have seen days somewhat similar to this in the past. Of course, certainly the move in the Nasdaq can be compared to the major flights we saw last October, and we did see recovery from those lows. The same thing could happen here and I think investors will be even more carefully monitoring economic data to see if the change they are fearing in the economy is actually happening.

Question:

In the past, have investors profited more by buying during a severe downturn or hanging on?

JEdwards:

Well, in the past investors have done well to buy major dips that the market has gone through. As with any downturn the question always is whether, for one thing, the dip is over and how far it might extend if not.

Question:

Sometimes, during a panic -- if this can be characterized as a panic -- investors often flee to bonds. Are they doing that today?

JEdwards:

Yes, we are seeing an increasing flight to the bond market Bonds actually had been fairly weak for much of the session, but as the selling in stocks has accelerated this afternoon, capital has flown into the bond market.

Question:

Is this a good time to dollar-cost-average?

JEdwards:

Yes, I think that might be a good strategy to follow here.

Question:

With the market reacting the way it has the past week and today, do you think we might see a crash coming?

JEdwards:

That of course depends on your definition of "crash." But I think it's difficult to see the kind of huge percentage decline that we would really consider crash on the level of the 1987 drop. I think the economic background still remains too robust for that kind of very sudden drop of 10% or 20% in a day.

Question:

There is so much gloom and doom today about the techs that I wonder if we are getting close to the bottom?

JEdwards:

As with the Internet stocks, the overall Nasdaq does seem to have taken such a severe pounding, that if we do not see a near-term rebound, that will show that the concerns and nervousness on the part of investors are much more deep-seated than we might have thought.

Question:

John, when a company splits, is it better to take profit and then get back in, or to just let it split (which is better profit)?

JEdwards:

I think that it might in that case. If you feel like you have a strong trading orientation, you might want to pick a good spot in the runup that comes on a split announcement and take some profits that you then might use to get in at a lower price.

Question:

Do you have any advice on how to be a good daytrader?

JEdwards:

The most crucial thing is to be aware of as much information on the stocks you are trading as possible and to know how to analyze that information quickly and effectively. And I would certainly say that among new sources that can help daytraders, or any kind of traders, TheStreet.com is right at the top.

Question:

I heard April is always a bad month. Is that true?

JEdwards:

I haven't done extensive research on that, but I can say that it's probably not so that every April is necessarily a bad month.

Question:

Could the flight to bonds be temporary like it was in October 1997?

JEdwards:

It very well could be a temporary flight and there's some thought that we might see bond prices weaken and yields rise, if those signs of economic flowing start to be truly pronounced.

Question:

How is the outlook for the market calculated?

JEdwards:

Not really sure what you're getting at there.

Question:

With interest low, tame productivity in great shape and earnings good, it seems that this is a correction that must be construed as healthy and giving us a buying opportunity -- your opinion?

JEdwards:

Given the strength we've seen in the economy I would have to say that I lean in that direction. I'm not seeing the kind of broad economic weakness that would suggest declines like this would be sustained over a long period.

Sage MikeM:

Thank you, John Edwards, Markets Editor at www.thestreet.com!