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The recent wave of market excitement has brought about an astonishing cash frenzy, with more money from investors flowing into stock-based funds in the past five months than in the past 12 years combined.

These Bank of America statistic reflects a period when the Dow Jones Industrial Average rose more than 26%.

At the same time, the market has been going through some wild trends, including a massive influx of meme stocks like GameStop and AMC Entertainment Holdings. The trading volume increased 40% in the first quarter compared to the last three months. Investors grabbed sectors that performed poorly over the past year and hoped for a significant economic recovery from the 2020 Covid-induced decline.

Amid the frenzy, roughly $ 569 billion has flowed into global equity funds since November, compared to $ 452 billion in the past 12 years, which dates back to the start of the longest bull run in history, according to Michael, chief investment strategist at the Bank of America Hartnett.

Those numbers could add slightly to ongoing concerns about financial bubbles, as valuations are roughly on par with just before the dot-com bubble burst in 2000. These are not common times, however.

“The markets have a logic right now,” said Art Hogan, chief market strategist at National Securities. “It’s less about irrational exuberance in the overall market, less about 1999-2000 levels, and more about the driver. The driver is clearly an explosion in economic activity that is likely to result in some earnings growth.”

The winning season for the first quarter is shifting into gear next week and the mood is high.

The year-over-year profit is expected to increase by 23.8%. According to FactSet, this would be the best growth rate since the third quarter of 2018.

More notably, however, the analysts keep increasing expectations as earnings approaches, which is the opposite of what normally happens. Wall Street generally cuts its outlook the closer it gets to the report date.

During the quarter, earnings estimates for the entire S&P 500 rose 6% to $ 39.86. This is the largest percentage increase in a quarter since FactSet began collecting the metric in the second quarter of 2002.

At the same time, expectations of economic growth are high.

GDP is expected to grow 6.2% in the first quarter, according to the Atlanta Fed. For the year, central bank officials expect growth of 6.5%, the fastest annualized profit since 1984.

The S&P 500 is trading at 20.4 times the forward earnings, which is actually below 22.8 times as of the end of 2020, but is still at the level of the dot-com bubble. Still, more than half of global stocks are still trading below their record highs, according to BofA.

Hogan said investors worried about a bubble should watch the earnings season not only for results but also for guidelines and look at inflation numbers to see how hot the economy is going.

“The best time to wrap your head around it is probably ahead of you. So focus on the next few weeks,” he said. “Look at the guidelines, that will be the tell. That tends to act as a regulator for the market.”

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