Investors had to wait more than five years, but the Dow Jones industrial average has wiped away the most terrifying period in stock market history since the Great Depression.
Long-term stockholders, who lost 54 percent of their money after the market peaked on Oct. 9, 2007, at 14,164, are now back to about even with the money they had invested in the Dow prior to the financial crisis. With dividends, they are now ahead.
On Tuesday, the Dow closed at a record high, 14,253.77, giving investors a gain of about 120 percent on any money they invested during the scariest moments of early 2009.
Ed Yardeni, president of Yardeni Research, says he thinks the new Dow record might finally get investors to believe this bull market is real. He has described the recent four-year recovery as a Rodney Dangerfield stock market — one that "can't get no respect."
While the market has been on a tear, most individuals don't trust it. They were traumatized by losses in 401(k)s and individual retirement accounts and have had trouble believing in a robust stock market when the sting of the financial crisis — including high unemployment and depressed home values — remains.
If it seems like there is a mismatch between the economy and the stock market, that is no illusion.
"Job growth is rolling over, not improving," Lakshman Achuthan, co-founder of the Economic Cycle Research Institute told professional investors at a CFA Society of Chicago forum Tuesday. In fact, he said, he thinks the economy is back in a mild recession.
But that still doesn't mean that the stock market won't continue to rise.
"Some forget the stock market isn't the economy," he said, noting that in three of the past 15 recessions the stock market climbed.
"It's important to know there can be a disconnect between the market and the economy," and that could be especially true now, because the Federal Reserve is intentionally keeping interest rates near zero on bonds so that people will take risks in the stock market, he said.
The Fed's goal, said Achuthan: "When people feel better because their 401(k) is better, they are more likely to go out and spend."
The practice seems to be working with affluent consumers, who tend to have more money in the stock market than the average American. Luxury-car sales, for example, have been strong while car sales in general remain lower than prefinancial crisis levels.
Some analysts remain skeptical of the stock market because they see the tremendous gains as fake. They claim the Federal Reserve has manipulated investors to take the risk of investing in stocks.
Stock market analyst Laszlo Birinyi, president of Birinyi Associates, challenges the skeptics.
His question: "Isn't it always the Fed that gets things moving" after a recession?
Birinyi thinks the stock market will continue to climb because fund managers, who have been cautious, will feel compelled to invest more in stocks so they don't disappoint clients with weaker returns than more aggressive managers.
"At some point, they will have to get in, unless they have a very loyal customer base" that will tolerate lackluster returns, he said. He believes the Dow's 10 percent gain over the last three months has been driven, in part, by professional investors fearing the loss of clients.
Individuals have also "tiptoed into the stock market because they have tired of bonds and corporate bonds," said Jack Ablin, chief investment officer of BMO Private Bank. "The Dow record will embolden them even more, and the trend is likely to stay in place" for a while. He expects the Standard & Poor's 500 to finish 2013 in the 1,500-1,520 range. It was at 1,539 on Tuesday, approaching the Oct. 9, 2007, high of 1,565.
Ablin thinks the stock market is now at fair value, based on healthy corporate earnings.
Although the 120 percent gain in the stock market since March 2009 might seem extraordinary, given concerns about the U.S. recovery and new risks in Europe and China, it's not without precedent, said Doug Ramsey, chief investment officer of The Leuthold Group.
"The market recovery is right in line with the four-year mark" in a bull market, said Ramsey, noting that the current bull market started in March 2009 after the market hit a nadir of 6,547.
Given its longevity, beware this bull market: Only a third of the bull markets since 1900 have lasted as long as four years before facing another downturn, or bear market, said Ramsey.
On the other hand, he notes that the current market appears to have some strength left because a wide variety of stocks are climbing. He says the stock indexes of large, small and medium-size companies are all hitting record highs. When the market starts to run out of steam, investors tend to grasp for blue-chip stocks for safety.
Should the market overheat, Birinyi said, one potential warning sign could be individuals appearing too hungry for stocks.
A clear sign, he said, will be "when you see the UPS driver stop by his broker for lunch."