After Dow 25,000, the Party Has to End. But When?

In the midst of a long-running bull market that is now reaching momentous proportions, most investors may well have forgotten that just two years ago, during the first five trading days of 2016, the market dropped 6 percent. It was the worst five-day start to a year ever and supposedly a harbinger of bad times.

We know where that ended. Spurred by Donald Trump’s election that November, market indexes surged to record levels and went far higher this year. The Standard & Poor’s 500-stock index gained 19 percent in 2017, the Dow Jones industrial average rose 25 percent, and the technology-heavy Nasdaq composite leapt 28 percent.

There wasn’t a single day last year when the S.&P. 500 fluctuated more than 2 percent, a level of low volatility unseen since the mid-1960s, according to James Stack, a market historian and president of InvesTech Research.

In a rare convergence, investor euphoria spread across the globe. A measure of market performance, the MSCI All Country World Index, gained 22.7 percent last year, closing at a record high. And so far this year, stocks have continued their advance. On Thursday, the Dow broke the 25,000 barrier for the first time, and technology stocks are soaring to new highs.

And that may not be such good news for investors.

“If there are any certainties, one will be that this party will eventually come to an end,” Mr. Stack said. “A correction would be healthy. The longer we go without one, the greater the risk this will end badly.

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