With the US stock market humming along, the investment landscape is starting to feel a bit frothy. The four largest tech companies—Apple, Microsoft, Amazon, and Alphabet—are now worth a combined $4 trillion. And in the last couple weeks, the Nasdaq and Dow have set record highs.
The strong market is delightful, but to the intelligent investor, the fresh highs mean something else entirely: Everything is going right all at once, so now it’s more expensive to invest than ever before. How long can this euphoria continue?
Especially in this climate, it’s tempting to throw caution to the wind and pursue high-risk investments. Volatile stocks are soaring and so are alternative financial instruments. Over the last year, Tesla shares rose 33% and bitcoin’s price jumped 92%. But for the most part, individual gambles are still pretty dicey for the typical investor. Pegging your livelihood on the prospects of one company, or a cryptocurrency, could soon leave you out in the cold.