At Friday’s close of 1068.30, the S&P 500 Index is up 60% from the March 2009 closing low of 666.79. Of course, this is after falling nearly 60% from the pre-crash peak of 1576.09 in October 2007. Running the math, the S&P500 needs to rise an additional 47.5% to break even with the October 2007 peak. Wow - talk about volatility!

Analysts are astounded at the market’s persistent rise and investors’ “irrational exuberance” — referring to the now-famous phrase coined by former Fed chairman Alan Greenspan.

And let’s not forget the Japanese stock market, which should serve as an example of what could happen to the U.S. stock market as a result of the unwinding of speculative excess. For those who don’t follow the Japancese stock market, it (the Nikkei 225 Index) peaked in 1989 and has never come close to those highs since. Moreover, while the Nikkei experienced 4 major rallies of 50% or more in the last 20 years, today it remains 70% down from its 1989 peak!

Maybe now is a good time to think about portfolio risk…