Our stock market is booming. Why? It seems to be largely due to the iPhone (a silly consumer electronic device which really isn't a phone because the battery cannot be changed, as someone else has pointed out here) and the emerging markets. Here's an idea what could cause things to go in reverse:
1) Apple announces that iPhone sales were less than the 1 million that they and everybody else estimated that they would sell within weeks. Even worse, Apple comes clean and announces that they have sold just over half a million and that they don't expect to sell 10 million units before the end of 2008, but are rather shooting for 5 million. They also fail to sign with any carriers other than ATT.
2) Emerging markets submerge. For all of the complaints that everyone has about our regulatory environment, it is designed to protect the investor. These kinds of protections aren't there in China or Vietnam or Brazil or any of the other economies upon which our economy is now relying. As we saw in 1998, it took a hiccup to take down SE Asia and send reverberations across the globe. The Chinese market is so overvalued, it could fall 50% and the valuations would still be ridiculous. There is no magic in the Olympics and there is no certainty that there won't be a tremendous crash beforehand. This isn't a market which is going to grow into its valuation, but it is one which is going to crash first. I'd expect it sooner rather than later.
3) The Muslims decide to remove Washington or Las Vegas. We are due for something that will make 9-11 look like a nuisance. These crazies are trying every day to kill us in large numbers. As Chertoff has said, the US needs to be correct every day and these animals just need to be lucky once. They are going to be trying harder to do something before Bush leaves office, and so again, I am expecting it sooner rather than later.
I've outlined some "colds" here. It could be one of these things or it could just be a sniffle, but things aren't quite as rosy as they might seem.
In the meantime, enjoy your profits on the market.
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