The Dow Jones briefly passed the 26,000 mark yesterday - another record for the New York exchange - though it eventually fell back to close below 25,800. The new high water mark comes less than two weeks after the Dow passed the 25,000 mark for the first time and it follows a year of broken records in 2017.

Paul Somerville, CEO of Somerville Advisory Markets, said the speed with which the market broke through this latest barrier is remarkable - even in the context of major gains for the Dow in the past year. "It's truly incredible," he said. "We took 23 trading days to get from 24,000 to 25,000 and now only seven trading days for another 1,000."

But while many are no doubt enjoying the blistering pace at which the market is rising, Mr Somerville sees the latest record as a sign that things are beginning to move at an unsustainable pace. "We've gone from fear to enthusiasm to greed in this market and now we're totally in the delusional phase in the US equity market," he said. "People are getting extremely excited and the retail investor is jumping in. We are seeing synchronised growth across the world so people are buying stocks". While US markets have been going up for nine years, Mr Sommerville said we have never seen anything like this before. Low volatility has also meant the US markets have not even seen a 3% pull back in valuations in the pass 14 months.

There are solid economic reasons behind some of the gains, such as the Trump tax bill that will help boost corporate profits as well as the weak dollar, which is helping US firms to gain more from overseas sales. But Somerville warns that what goes up can go down, and there is a foundation building which could begin to undermine some of the gains enjoyed in recent months. "The absolute number one flash point and the only thing to watch is US bond yields," Mr Somerville said. "The US 10 year yield has actually been falling for about 37 years, but in the last 18 months it is starting to tick up. It's trading around 2.6%. If that starts trading nearer 3%, which I believe it will be at the end of the year, that will create big problems for the US equity markets."

One area that has not been enjoying the same kind of positive momentum as the Dow is Bitcoin, which has dropped 16% of its value in the past day as traders grew increasingly concerned about a crackdown by global regulators. The cryptocurrency is now trading more than 40% below the peak it reached late last year, though it is still considerably higher than it was a year ago. "They call it a currency but there's no way it's an actual currency," Mr Sommerville said. "Nobody uses it as a currency, it's a highly speculative, unregulated instrument. Could it go up, could it double? Yeah. Could it halve? Absolute. But as an investor, you're taking huge, huge risks," he added. 

What does have potential in Mr Somerville's eyes, however, is the technology that powers Bitcoin - the blockchain - which creates a more transparent system for transactions. And however wary he may be about Bitcoin, he is even more cautious about the many other cryptocurrencies that have come to prominence in recent weeks as investors look to find the next 'big thing' in which to put their money. "There's about 3,000 crytocurrencies and most of them, I think, will go bust so I would stay away from them," he cautioned.

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