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A Wall Street investment chief warns new stock-market highs could be setting up a 'historic trap' for investors a?? one that also appeared just before the dot-com crash

A Wall Street investment chief warns new stock-market highs could be setting up a 'historic trap' for investors a?? one that also appeared just before the dot-com crash
Chris Hondros/Newsmakers/Getty



The lofty valuations of big technology companies at the forefront of the stock market's rally could short-circuit the next all-time high, according to Doug Ramsey, the chief investment officer at The Leuthold Group.




He showed two historical analogs that saw stocks came within 2% of their record high before rolling over hard.




Beyond tech valuations, Ramsey flagged the relatively weak performance of sectors that traditionally lead when the economy is recovering from recessions.




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Despite the extraordinary turbulence that investors have endured this year, not everyone will be breathing a huge sigh of relief if stocks break record highs in short order.
You can count Doug Ramsey, the chief investment officer at The Leuthold Group, among that cohort. With the S&P 500 now within 1% of its Feb. 19 high, Ramsey is flagging a number of reasons why the next record-setting close may not entirely be cause for celebration.
For starters, he cites the undisputed champions of this move higher: big technology stocks that were perfectly positioned to sell their products and services to a physically distanced world. But even this fundamental demand driver behind their performance is not enough to shroud how expensive they have become, and how reliant the broader market has become on their fate.
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