Some investors have been tempted to chase bigger gains — and have exposed themselves to potentially devastating losses — through riskier plays, such as concentrated positions, trading options and leveraged exchange-traded funds, the Wall Street Journal reported. Others are borrowing against their investment portfolios, pushing margin balances to the first record in more than two years, to buy even more stock. The stock market is on the verge of closing out one of its frothiest runs in years. Some of the biggest fortune makers include Tesla, up 691% so far this year, and fuel-cell company Plug Power Inc., more than 1,000% higher. Zoom Video Communications Inc. has added 451%, while scores of biotech stocks have also soared, including COVID-19 vaccine maker Moderna Inc., up 532%. “The stock market is euphoric right now,” said James Angel, a Georgetown University finance professor. “A lot of people are extrapolating from the recent past and going, ‘Wow, the market’s gone up a lot and I think it’ll go up more.’ We’ve seen this play out before, and it doesn’t end well.” A strong indicator of stock-market euphoria flashed red last month. Investors borrowed a record $722.1 billion against their investment portfolios through November, according to the Financial Industry Regulatory Authority, topping the previous high of $668.9 billion from May 2018. The milestone is an ominous one for the stock market — margin debt records tend to precede bouts of volatility, as seen in 2000 and 2008.
