Wall Street stocks fell off a cliff within minutes of opening on Wednesday. Fund manager Wayne Thornbrough felt a bit queasy as the Nasdaq dived 5.7 per cent and the Dow Jones Industrial Average plunged 4.2 per cent to 9,668 points, a low not seen since April last year. But with 32 years in the financial industry, Mr Thornbrough had been there before, including of course the Black Monday crash which struck Wall Street 13 years ago yesterday. He saw a lining in the dark cloud of panic selling. 'It bothers me too when I listen to the TV and radio,' said the head of global growth equities for UBS Asset Management. '[But] I have just been around long enough to know that when I get those feelings in the pit of my stomach that we are getting closer to a turn.' Both the Nasdaq and the Dow staged recoveries to end with more modest losses of 1.14 per cent and 1.32 per cent. Institutions stepped in for some rapid-fire bargain hunting in what was being referred to by traders as 'Whiplash Wednesday'. This year the Nasdaq has staged two crunching downswings which have sent global stocks spinning. It lost 37.32 per cent from peak to trough between March 10 and May 23 and has lost another 25.10 per cent since September 1. Mr Thornbrough believes it is all part of one grand correction which soon may end. 'What I have seen today [Wednesday] is making me less worried in the sense that we are finally getting the kind of emotionalism . . . that indicates you are closer to the end of a period like this,' he said. 'The thing that has bothered me most over the last several months is that the market was correcting and going down and people were fairly calm about the whole thing. Generally at turning points the fear has to rise. We are finally getting enough events that are scaring people.' There have been plenty of scared Hong Kong investors who have been throwing away good technology and telecommunications stocks after bad in recent weeks as they danced to the Nasdaq's tune. For some that means bargain buys. 'Some of the operators like SmarTone [Telecommunications] are very attractively priced. Look at Asia Satellite, it is ridiculously cheap. Everything has got hammered down with this wave of negative sentiment,' said Eric Tomter, regional telecoms analyst at Dresdner Kleinwort Benson. Asia Satellite Telecommunications, a profitable company which pays dividends, closed at HK$16 yesterday, 57.21 per cent down from its year high of HK$37.40. SmarTone, which boasts blue-chip backers British Telecommunications and Sun Hung Kai Properties, closed at HK$9.90, down 75.18 per cent from its year high of HK$39.90. Analysts were recommending it as a buy earlier this year when it was above HK$30. Impressive results from Microsoft, computer server maker Sun Microsystems and Finnish mobile telecoms giant Nokia are likely to provide some short-term relief to stock markets around the world. Much of the recent damage has stemmed from the deflation of the exaggerated earnings expectations as first chip giant Intel Corp then mobile equipment maker Motorola and then computer maker IBM stepped up to the plate and admitted that they would not measure up in the third quarter. Even worse, the companies lowered their outlooks for the fourth quarter and next year sending shockwaves through the world's markets which use the Nasdaq as a benchmark. 'In the PC [personal computer] sector there has been a serious reassessment of some of the expectations that were priced in. Semiconductor stocks have collapsed 50 per cent,' said Ian Rowley, the global growth strategist at UBS Asset Management. When Intel was trading at its peak of US$74.87 on August 31, earnings growth of 20 per cent per year for the next seven years was being priced in. Now at US$38.18, a more earthly growth rate of only 3 per cent for seven years is in the price. Intel provides the central processing units in more than 80 per cent of the world's PCs. Even 3 per cent growth may not be possible if bearish outlooks for the PC turn into reality. Investors are slowly learning that 'growth' stocks, supposedly immune to the economic cycle could experience a year of profit decline. 'At least the market has wised up that technology is cyclical and that growth rates will move with the economy,' Mr Rowley said. For the bulls who believe that the technology story is just going over a 'speed bump' Intel is now cheap at 22 times forward earnings and so is Microsoft at 30 times. They compare well with some firms with lower growth prospects such as PepsiCo, trading on 32 times forward earnings. There may be more nasties to crawl out of the technology cupboard, Mr Rowley warned. Telecom equipment makers are still trading on some fancy multiples which could well be deflated. JDS Uniphase, which makes fibre-optic networks, was trading on 713 times earnings in March and is still on a price earnings ratio of 212 times earnings. Not only have extravagant earnings growth expectations been built into share prices but many telecoms equipment firms are providing credit to allow customer operating firms to buy their products. A United States and a European start-up operator have gone bust leaving equipment makers with large unpaid bills. Marc Faber, the notoriously bearish Hong Kong-based investment adviser, believes investors are witnessing only the opening acts of what will be a harrowing few years as an overvalued Wall Street gets its come-uppance. The irrational pricing in US stocks extended far beyond technology plays, he said. Even the broad-based Standard & Poor's 500 index has built into it 17 per cent earnings growth for each of the next five years. 'Investors are just waking up to the fact that the earnings expectations they were pricing into stocks were unrealistic,' he said. The Nasdaq index, which closed at 3,171.56 points on Wednesday, will fall to a low of between 800 and 1,500 points, he predicted. The Dow Jones Industrial Average, which closed at 9,975.02 points, would drop to between 5,000 and 6,000 points, he forecast, while the US economy would experience 'the hardest of hard landings'. But Mr Thornbrough believes investors should be thinking about putting some of their money to work again. 'It has been a very traumatic period. We have got a lot of analysts lowering expectation estimates now and it is getting a little overdone,' he said. 'That doesn't mean that stocks are going to turn around and go straight back up again. 'But we haven't seen anything that argues . . . that technology isn't going to be an incredibly important rapidly growing area.'