NEW YORK — Ignoring warnings from Wall Street skeptics is as American as apple pie — especially when stock prices are rising and investors are making lots of money, as they have since the market took off in early March. Sometimes, shutting out bearish lines of thought is a profitable strategy. But it can also prove to be dangerous to an investor's financial well-being if the advice to proceed with caution turns out to be correct.

"Eventually," Roubini says, "a correction has to occur." Rosenberg says he is "as nervous as I was in 2007," before the financial crisis hit. He says the stock rally does not reflect reality and that prices reflect too bright an outlook for economic growth and corporate profits in 2010. "If you have the view that it will be a very bumpy road to the next sustainable earnings expansion, stocks are very expensive," relative to earnings, says Rosenberg, who prefers to use companies' reported earnings — and not operating earnings, which strip out all kinds of one-time charges and so-called non-recurring losses. When you calculate a stock's price relative to these more conservative profit numbers, stocks appear far more expensive.

After suffering huge losses last year, professional portfolio managers can't afford not to be invested in stocks right now, for fear of posting subpar returns compared with their competition and industry benchmarks. "If you're a money manager, you are aware of the risks, but when you see the market moving up day after day, it makes it hard to give credence to academic reasons why the market can't keep going higher," Bensignor says.