Investor sentiment jumped to a 16-year high in the first quarter, according to the latest Wells Fargo/Gallup Investor and Retirement Optimism Index.
The index, released Thursday, rose 30 points to hit 126 in the first quarter, according to a telephone survey of 1,007 U.S. investors from Feb. 10 to 19. That was just days after the Dow Jones industrial average topped the psychologically key 20,000 level.
The last time the optimism index was higher was during the tech bubble in November 2000, when the index was at 130. The similarly high readings are likely to raise concerns that investors are overly optimistic about the stock market's recent rally. In late 2000, the dotcom boom was in its last throes.
This time, however, is different, said Sameer Samana, global quantitative strategist at Wells Fargo Investment Institute.
"People still hold a lot of cash, still very concentrated in very large-cap equities. They haven't embraced global diversification," he said. "This is more suggestive of how people feel about their finances."
Sixty percent of investors in the survey said now is a good time to invest in financial markets, the highest percentage since early 2011.
U.S. stocks have rallied into record territory in the months since President Donald Trump's election. While some analysts point to improving economic fundamentals and corporate earnings, most on Wall Street attribute the gains to bets that the U.S. will see stronger growth, in the short term at least, thanks to lower taxes, slashed regulation and new government spending.
The survey found that most investors do not expect a tax cut. Thirty-nine percent expect an increase in the percentage of income they pay on taxes in the next few years, and 31 percent expect their tax rate to stay the same. The rest expect tax rates to go down, the survey said.
"What it would suggest to us is, expectations are really low," Samana said.