Evercore ISI’s Julian Emanuel believes Nvidia’s monster rally is fueling fears of missing out.
He found that clients, including many who traded during the dot-com boom and subsequent crash, are now more worried about being underinvested than overvalued.
“This is the first time this has happened for us since 2021,” the firm’s senior managing director said on CNBC’s “Fast Money” on Monday. “It’s kind of a wake-up call.”
In his note on Sunday, Emanuel warned clients that there are similarities to the emerging Y2K problem, especially when it comes to dynamics. This time, he cites the hype around artificial intelligence and the idea that the US can avoid a recession as the main catalysts.
“The mood is very, very optimistic. The bears have been wiped out,” he told CNBC’s Melissa Lee. “It’s time to think more about risk than reward until we cool down a little.”
On Monday Dow closed at a record high of 38,797.38. Technological Nasdaq Composite is up 6% this year and is less than 2% from its all-time high.
Meanwhile, Nvidiaworld leader in the production of artificial intelligence chips, has grown by 46% this year and by 240% over the past year.
Emanuel believes stocks could experience a 13% pullback this year, which he considers normal in a non-recession period. “If you don’t see yourself as a buyer, you should probably relax a little bit,” Emanuel said.
However, he didn’t completely ignore the winning trade on the rise.
“We were on board in parts,” he said. “We like communication services. It was a great sector. We think there are protective properties.”
Emanuel’s top picks also include consumer goods, healthcare and money markets.
“At the end of the day, you’re still earning 5% in cash,” he added.
His S&P 500 Index The year-end target is 4,750, suggesting a loss of about 5% from Monday’s close.
Denial of responsibility