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Bloomberg View: The Stock Market's Rational Exuberance

The Dow’s record-setting rally is cause for cheer and caution
Traders work on the floor of the New York Stock Exchange
Traders work on the floor of the New York Stock ExchangePhotograph by Spencer Platt/Getty Images

The stock market, in normal times a reliable proxy for an economy’s health, continues to set records. And why not? Corporate profits are higher than ever. Housing is springing back. Auto sales are on pace for the best year since 2007.

At the risk of sounding like party poopers, these aren’t normal economic times, and the stunning four-year rally, during which almost $10 trillion has been restored to U.S. equities, is both a welcome trend and a reason for worry. Individual investors who are tempted to join the party should take special care.