“It’s not as obvious a bubble as 20 years ago,” said Jay Ritter, a finance professor at the University of Florida who studies initial public offerings. “But we’re close to bubble territory.”

The market appears overheated by another gauge that investors often use to determine how cheap or expensive a stock is: its price relative to the profits it’s expected to make. Currently, the so-called price-to-earnings ratio for S&P 500 companies is above 22, and has been for much of the year. The last time the market was consistently above that level was in 2000.

The appetite of individual investors has been an unexpected byproduct of the pandemic. For many, trading stocks started as a way to indulge their speculative itch when other avenues, such as sports gambling, were effectively shuttered.

Tim Mulvena, a 32-year-old medical software salesman in Oneonta, N.Y., was one of them. He first logged on to Robinhood, a free-trading app popular with small investors, in March and started to buy stocks as the markets were collapsing.

“I have got to dabble and just see where this takes me,” Mr. Mulvena said.

He has notched gains of roughly 60 percent on Apple, his largest position. And his investment in Penn National Gaming, a regional gambling company that bought Barstool Sports, a digital sports site Mr. Mulvena was a fan of, has more than doubled.

Even those who have stuck with less active investments — like 401(k) investors dutifully contributing to plain vanilla index funds — have gained from the market’s upward drift, enticing further inflows. Analysts at Bank of America Merrill Lynch recently cited “frothy prices, greedy positioning” as the reason for huge inflows into equity market mutual funds and exchange-traded funds in the past six weeks.

Much as they did in the 1990s, smaller investors are pouring money into trendy, tech-focused companies, many of which have seen their businesses gain traction during the pandemic. Their favorites include the cloud computing software maker Snowflake, the online surveillance company Palantir and the energy storage company QuantumScape, which is up 144 percent in December alone. Investors also like Etsy, the online marketplace, which is up 330 percent this year. Just over a week ago, 908 Devices — a maker of hand-held analytic devices — rose about 150 percent in its trading debut.



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