The tech-heavy Nasdaq is on pace for its steepest monthly decline since January 2016, but veteran investor Paul Meeks isn't ready to jump into the wreck for bargains just yet.
Meeks, who ran the world's biggest tech fund for Merrill Lynch during the dot-com boom and subsequent collapse, is predicting more trouble due to a powerful shift in the market.
"What we have seen, and it's unmistakable, is a move from growth to value," he said Wednesday on CNBC's "Trading Nation." "That's going to continue for some time, pressuring these tech stocks almost regardless of what these companies say in their upcoming quarterly earnings reports."
That's because Meeks doesn't think the challenges facing technology originate from a fundamental issue.
"Mostly, it's good, and relatively better than the other 10 sectors of the economy," he said. "There are always going to be scattered names whether they be FANG [Facebook, Amazon, Netflix, Google parent Alphabet] or others typically in the internet space — typically tied in some way to cloud computing — that will do quite well."
But tech faces a second challenge. The U.S. trade war with China is a major risk to the group, especially semiconductors, he said.
"They're headquartered here, they design here, and they manufacture abroad, particularly in China. And when the chips have been assembled and they come back into the states, they're banged by these tariffs," he said. "I really do worry about the Chinese friction, and I am not fool enough to think that this is going to be a short-term issue. We could have a trade war and tariff battles that go well through 2019."
Yet, Meeks makes it clear he's not sitting on the sidelines. He's finding out-of-the-box opportunities with ties to Silicon Valley.
"There's other ways to still play technology without going whole hog. One is through some Fintech plays. I like Silicon Valley Bank," Meeks said, pointing out that it benefits from doing business with tech companies and should profit from rising interest rates.