selloff

Even Warren Buffett, the greatest stock picker of all time, endorses low-cost, broad-market index funds and exchange-traded funds for most retail investors. This is because most investors don’t have the time to deeply research individual stocks, while broader-market indexes tend to win over time, with 8% to 10% long-term returns on average.

While large banks were the first to create index funds for their institutional clients, Vanguard was the first to offer diversified index funds to the public in 1976. Today, Vanguard is one of just a few major asset managers offering accessible, extremely low-cost index funds, costing investors just a handful of basis points in fees.

After the market’s strong recovery from April’s “Liberation Day” tariff fiasco, here’s the Vanguard fund I’d recommend today.

Buy the total market

Today, technology stocks, particularly around the AI buildout, have soared to very high valuations. Interestingly, some of the largest stocks in the world that have gone up the most, defying the law of large numbers, leaving large indexes like the Nasdaq-100 or even S&P 500 (^GSPC 0.53%) the most concentrated they’ve ever been in recent history.

Of course, there is a good reason why growth-oriented, large-cap technology stocks have soared over the past six months and even the last few years: artificial intelligence. The prospect of generative AI could very well lead to the next industrial revolution; meanwhile, only the largest, best-funded, most technically advanced companies likely have a chance to compete. Therefore, it’s no surprise the “Magnificent Seven” stocks only seem to be getting stronger.

That being said, valuation matters, and the widening gulf between the largest tech stocks and smaller stocks in other sectors is huge. Furthermore, once AI technology is honed and widely distributed, every business in every sector of the economy should be able to benefit from GenAI.

So while investors shouldn’t abandon AI tech stocks en masse, now would also be a good time to look at other types of stock in left-behind sectors. That makes this Vanguard ETF an excellent choice today.

Image source: Getty Images.

Vanguard Total Stock Market Index Fund

The Vanguard Total Stock Market Index Fund (VTI 0.51%) is my recommendation for index investors looking to put money to work today. As the name implies, this index tracks the entire stock market, including large-, mid-, small-, and even micro-cap stocks — the entire investing universe in the U.S.

Of course, a broad-market index will also have high weightings of the large-cap tech stocks discussed. Yet while investing in the total market index fund will still give investors some exposure to the AI revolution, those stocks will have a smaller weight than other index funds, such as the Vanguard S&P 500 ETF (VOO 0.60%). For instance, in the VTI, the largest stock in the market, Nvidia, has a 6.5% weighting, whereas Nvidia sports a 7.8% weighting in the VOO, which tracks the S&P 500, and a 9.9% weighting in the Invesco QQQ Trust (QQQ 0.73%), which tracks the Nasdaq-100.

Meanwhile, the total market fund will give a larger weight to smaller stocks in other cheaper sectors of the economy, which may outperform if there is a rebalancing and reversion to the mean. This is what happened in the early 2000s, when technology stocks crashed over the course of three years, but cheaper value stocks in other sectors of the market went on to outperform.

Currently, the VTI trades at a weighted average 27.2 times earnings, with a 1.14% dividend yield. It has risen 13.9% year to date, which is a strong performance, albeit behind that of the VOO and QQQ. Its expense ratio is 0.03%, which is so minuscule the fund is practically free.

Torn between momentum and value? Buy everything

The VTI is therefore a nice middle ground between those who are enthusiastic about the general prospects for AI technology, but are squeamish about tech stocks’ sky-high valuations relative to lower-priced sectors today. Therefore, it’s a great choice for investors looking to allocate money to stocks in October as part of their investment plan.

Cryptocurrency prices slumped Sept. 22 with Ethereum (ETH 0.01%) losing 9% in the early hours of Monday morning. The second-biggest cryptocurrency fell from almost $4,500 to $4,075, before finishing the day at $4,200. Bitcoin (BTC 1.56%) dropped 3% and the total crypto market cap slipped back below $4 trillion.

Crypto positions saw more than $1.6 billion in liquidations in 24 hours — the biggest liquidation this year, according to CoinGlass data. Ethereum was hardest hit with more than $500 million wiped out. It’s a reminder of the way excessive leverage in crypto can quickly snowball. The market moved against investors who had borrowed to fund bullish positions. As it did, their positions were forcibly closed, which added to the broader downward pressure.

Let’s dive in to find out what the rocky start to the week means for crypto investors.

What investors need to know about the sell-off

When cryptocurrency prices are rising, it’s often easy to forget about the risk involved. Dramatic shifts and liquidations remind us that this is still a relatively new and evolving asset class.

1. Cryptocurrency volatility hasn’t gone away

Bitcoin is still a volatile asset. That volatility has lessened as it has gained traction as a store of value and attracted institutional investment, particularly through exchange-traded funds (ETFs). According to Fidelity, Bitcoin was less volatile than shares of Netflix in the two years running up to March 2024. However, the volatility is still there.

This is even more so for Ethereum, which serves a different purpose than Bitcoin and has not yet benefited from the same inflows of corporate and institutional capital. Ethereum is starting to be viewed as the smart contract workhorse of crypto, supporting a wealth of stablecoin and decentralized finance applications. However, it is still more volatile than Bitcoin as this week’s dramatic price swing demonstrates.

2. Keep an eye on crypto leverage

Investing using margin and leverage involves using borrowed funds to take a larger position in an investment. It can work in different ways, but for many crypto investors, it involves depositing assets as collateral to increase purchasing power. As an investor, it can be risky because you could lose your collateral — known as liquidation — if the market doesn’t rise or falls.

On a broader level, leverage amplifies market activity. That’s why it’s concerning that the levels of crypto leverage are coming close to those of Q4 2021 and Q1 2022. An August Galaxy report showed that total crypto-collateralized lending increased to more than $53 billion in the second quarter of 2025. That’s a 27% increase from on the quarter before.

In 2022, we saw the way that excessive leverage can quickly spiral and exacerbate market volatility. Markets are cyclical by nature, and history shows us that cryptocurrency bull runs don’t last forever. When prices start to fall, as they did at the start of the week, those declines are magnified by the various forms of buying crypto using borrowed money.

There’s also growing concern about crypto corporate treasury companies, some of which are using debt to fund their Bitcoin and Ethereum purchases. Adding crypto to company balance sheets using borrowed money has become popular this year. The danger is that when prices fall, they may need to sell their crypto to service debts, causing prices to fall further.

Image source: Getty Images.

3. Bitcoin and Ethereum are still trending upward

Dramatic price swings are always unsettling, but it’s important to keep them in context. Bear in mind that both Bitcoin and Ethereum are still outperforming the S&P 500 — in spite of the recent sell off. As of Sept. 24, the S&P 500 has gained about 16% year over year. Bitcoin is up almost 77% and Ethereum increased 57% in the same time period.

Prepare for further turbulence

Crypto prices seem to have stabilized today, with Bitcoin holding its head over the $113,000 mark and Ethereum at almost $4,200. However, Bloomberg warns that the market is braced for further volatility. It says Bitcoin options traders are betting on two extremes — a slide to $95,000 or a rally to over $140,000, showing that we may yet see more dramatic price swings.

Bitcoin and Ethereum have rallied this year, buoyed by a crypto-friendly administration, changes in regulation, and — most recently — hopes for Federal Reserve interest rate cuts. Potential Securities and Exchange Commission approvals of spot altcoin ETFs may also give the industry a boost in the coming months. Even so, economic doubts and inflation concerns continue to weigh on prices. If further rate cuts do not materialize as anticipated, crypto prices may not be able to sustain recent gains.

As a long-term investor, one way to manage volatility is to use dollar-cost averaging, buying a set amount of crypto at regular intervals rather than in a lump sum. It’s also important that crypto only make up a small amount of your portfolio, and that you set clear goals to avoid making panic investment decisions.

Cava Group (CAVA 1.28%) and its customers know all about dips. The chain’s tzatziki, spicy hummus, Greek green goddess, and signature “crazy feta” are so popular that even some local grocers stock them in eight-ounce containers. Investors are also learning all about Cava dips.

Shares of the fast-growing operator of fast-casual restaurants specializing in Mediterranean cuisine have fallen sharply in recent months. Cava stock is down 62% since peaking in November. A feel-good rebuttal is that the stock has roughly tripled since going public at $22 two years ago, but that doesn’t help the investor who warmed up to the the Cava story late last year.

How did the stock get here? Will it continue to head lower? There’s a lot to cover here, but like its crazy feta, I also want to argue that it’s a tasty dip worth buying.

Mediterranean goes subterranean

Cava is a leader in fast casual, a potent subset of eateries bridging the gap between fast food and casual dining. It’s also riding high on consumers embracing the health benefits of savory Mediterranean diets. When Cava hit the market in the springtime of 2023, its prospectus spelled out the unique characteristics of its customer base as primarily well-off and young. Household income was north of $150,000 for 37% of its patrons (and above $100,000 for 59% of its base). Cava also noted that 28% of its visitors are between 25 and 34 years old. Female-identifying guests accounted for 55% of its visitors.

Backed by heady expansion and stellar comps, Cava became a new industry darling for investors. As the pandemic-era recovery found more companies calling employees back to in-office work, Cava would become even more popular as a hotspot for workday lunches or picking up food on the way home from work. The affluent nature of its fans made it less likely to fall into a funk if the economy should falter.

The stock’s initial ascent was fueled by its improving fundamentals. It turned profitable in its first quarter as a public company, and continues to pad its bottom-line results. Revenue growth would accelerate in 2023 as well as 2024. The chain has been feeling a bit more mortal lately. Year-over-year revenue growth has decelerated for three straight quarters. Same-restaurant sales are also slowing. Let’s size up where Cava stands now, and if its deflated share price during the slowdown makes it a compelling buy here.

Image source: Cava Group.

Stepping on the scale

There are two sides to Cava’s latest quarter. Compared to most restaurants that slumped with sluggish sales, negative comps, and bottom-line hits through the second quarter of this year, Cava’s report two weeks ago was a breath of fresh feta. Revenue rose 20% to $278.2 million, up an even tastier 63% compared to where it was two springtimes earlier. It ended the quarter with 398 locations, a nearly 17% increase over the past year. Comps were up 2.1%. This is well below its previous store-level leaps, but a rare positive showing in a quarter of industry negativity. Chipotle Mexican Grill — the gold standard in fast casual — saw its second-quarter revenue inch just 3% higher with a 4% decline in comps.

Slowing growth isn’t a good look, but it does move the bar higher. Average sales volume for a Cava store over the past 52 weeks is now $2.9 million, up from $2.7 million a week earlier. Cava’s reported net income of $18.4 million was lower than it was a year earlier, but it was 10% higher on an adjusted basis. The chain’s adjusted net income margin contracted during the quarter, but its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) moved higher. It wasn’t a great report, but most eateries would’ve loved to put out numbers like that in this challenging climate.

It’s true that 20% top-line growth is nearly half the 39% jump that it posted back in November of last year when its stock hit an all-time high. Growth has been cut in half. Why shouldn’t the stock’s market value be cut by more than half? It’s not a fair judgment for Cava.

The chain is still posting double-digit revenue growth and positive comps at a time when many of its peers are struggling. It’s not a failure risk. There is no long-term debt on its balance sheet, just the long-term lease obligations of its growing company-operated empire.

Cava’s trading at an enterprise value that is 7.2 times its trailing revenue. This is higher than Chipotle’s multiple of 5.2, but it’s a historical discount for a company that is now proven with more than $1 billion in sales over the past 12 months. If you think Chipotle’s P/E ratio is rich at 38, you won’t be relieved to see Cava trading for 58 times its trailing inflated profitability. However, companies deserve a premium when they are operating at a higher level than their peers. There is still a long runway for growth. It still expects to top 1,000 locations by 2032, a 150% burst in the next seven years. Scalability will boost profitability under a kinder climate.

Cava may not seem textbook cheap, but it doesn’t mean that it will get cheaper. Buying quality at a discount — and that’s where Cava finds itself right now — could be the right move for opportunistic investors.