Investors ponder Nasdaq’s latest record high

Tech stocks lead way as index rises for 9th consecutive session

If streaks are meant to be broken, then tech stock investors should be on guard.

Surging technology stocks have powered the Nasdaq composite to nine consecutive sessions of gains, its longest winning streak since a 10- day run that ended Feb. 24, 2015.

The gains in the rally total nearly 5%, which leaves the Nasdaq up 18.6% for the year and at a record high. The Nasdaq has enjoyed nine- day stretches of wins five other times in the past 20 years and had a run of 17 up days in 1985, according to Bespoke Investment Group.

Nasdaq stocks have become the investment of choice on Wall Street. Investors continue to flock to popular and dominant companies such as Facebook, Amazon, Apple, Netflix and Google parent Alphabet — the so- called “FAANG” stocks — whose shares keep rising in value. Facebook and Netflix are both up more than 40% this year.

The big run- up raises questions: Can tech stocks keep rising? Will Main Street investors risk getting swept up in the euphoria and go on a tech stock buying binge when prices are at their highest and are vulnerable if bad news hits?

In a sign of the Wall Street herd mentality gaining momentum, investing in the Nasdaq is now the most “crowded trade” — Wall Street- speak for pretty much everyone piling into the same investment at the same time — according to a survey of global fund managers released Wednesday by Bank of America Merrill Lynch. Popularity isn’t necessarily a bad thing for stocks, but there’s often risk when investors are all betting on the same investment going higher; if the trend reverses, these “momentum” stocks can quickly lose altitude, says Mark Luschini, chief investment strategist at Janney Montgomery Scott. “These have become momentum trades, and the shakeouts in the past 30 days are indicative of the potential for further volatility and declines” in these hot stocks, Luschini says. The shakeouts he’s referring to are a few days in June when the Nasdaq suffered a number of sizable sell- offs, including a 1.8% drop on June 9 and losses of 1.6% and 1.4%.

But not everyone on Wall Street thinks today’s tech titans will suffer the fate unproved tech stocks did in 2000, when the dotcom bubble burst because of massive overvaluation. The current crop of tech firms driving the Nasdaq are benefiting from strong earnings growth, huge market share in their respective areas and far lower valuations.

MARK LENNIHAN, AP