A 12-year-old bull market; SPAC mania; IPOs that more than double on the first trading day; an army of amateur traders and GameStop mania. It certainly feels like irrational exuberance–and it triggers alarms for those who remember the dot-com bubble of the late 1990s. “The parallels we have today are historically very, very concerning,” notes Jim Stack, president of Whitefish, Montana’s InvesTech Research and Stack Financial Management. “The current froth is the icing on the cake, and when you look through it, you see a lot of other underlying issues.”

Despite a steep 30% market correction last year, the longest bull market on record has helped the S&P 500 surge nearly 300% over the past ten years–roughly in line with the growth in the ten years preceding the dot-com crash in 2000, after which stocks plunged 40% over two years. Forbes analyzed 11 key market metrics that flashed warning signs just before the stock market crashed in March 2000. Bearish signals outweigh bullish ones, but contrarian investors should take comfort in the old adage that stock markets tend to climb a “Wall of Worry.”

In Yale economist and Nobel laureate Robert Shiller’s book Irrational Exuberance, he introduced a price/earnings ratio for the S&P 500 that averages inflation-adjusted earnings over the prior ten years in an effort to eliminate cyclical swings. Though not as steep as the peak P/E ratio leading up to the dot-com bubble crash in March 2000, today’s Shiller P/E multiples are the highest they have been in two decades. “Valuations on Wall Street are in the stratosphere,” says Stack.

In the months leading to the dot-com bubble crash in 2000, bullish sentiment peaked at about 75%, compared to 46% last week, according to the AAII’s weekly survey, which simply asks its members whether they are bullish, bearish or neutral on the stock market’s outlook for the next six months. Savvy investors view this retail investor barometer as a contrarian indicator so high bullish ratings are bearish.

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