Is the Stock Market Dangerously High?

The month of March reminds us that bad things happen to good markets. On March 9, 2009, the Dow Jones industrial average closed at 6547, down by more than half from its record high a year and a half earlier. But after descending into that Death Valley, the stock market has climbed to new heights, with the Dow nearly quadrupling. Two more years like 2017, when the index returned a little more than 28%, and we'll reach my personal holy grail: Dow 36,000.

But the stock market's success can't obscure unpleasant memories. Are we witnessing another melt-up? Investopedia defines melt-up as a huge increase in stock market value driven "by a stampede of investors who don't want to miss out on its rise." The danger, of course, is that