Looking back now, the last few weeks have been one of the biggest bonanzas investors have ever witnessed.

Since the market bottom on March 23, the S&P 500 has rallied as much as 35% in a little more than a month. The tech-heavy Nasdaq, meanwhile, gained as much as 40% since its bottom, and was even in positive territory for the year before a recent pullback.

You don't have to look hard to find multi-baggers, either. Shares of Wayfair (NYSE:W), the online home goods seller, skyrocketed more than 800% from trough to peak in just a matter of weeks. Carvana (NYSE:CVNA), the fast-growing online used car dealer, surged 354%, and United Natural Foods (NASDAQ:UNFI), a wholesale food distributor and supermarket operator, has soared as much as 367%.

Dozens of stocks have hit all-time highs, and the S&P 500 is now trading at levels seen as recently as last summer, while the Nasdaq hit marks from January. Given the dismal economic data and the uncertainty around the COVID-19 pandemic, however, it's worth asking if stocks deserve to be at such elevated levels.

Though I've made a few small purchases in recent weeks, I've been saving up cash to invest when the market's more favorable. Here's why investors could see better opportunities in the coming months.

A pile of $100 bills.

Image sources: Getty Images.

1. The reopenings are hardly grand

The latest reason for investor euphoria is that states have begun to reopen their economies. It's true that a number of states have lifted stay-at-home orders, but the reality is that the post-lockdown economies in these states are barely recognizable. Social distancing is still de rigeur across the country, which means that a normal, functioning economy is impossible.

In Texas, for example, restaurants in most of the state are limited to just 25% capacity for dine-in customers. A number of small business owners in these states are reluctant to reopen their businesses over fears of the virus (or that customers will stay away because of it), and polls show that most Americans are more worried about shutdown protocols being lifted too soon rather than too late. 

Schools remained closed in almost every state, and districts are formulating plans for remote learning in the fall, as students might still not be able to attend in person. The California State University system has already cancelled most in-person classes for the fall, and Los Angeles County, the nation's biggest, said its stay-at-home order would last at least through July.

Without schools reopening broadly, which means not just kids returning to school but tens of millions of parents being freed from their duties as assistant teachers, a return to a normal economy is a fantasy.

A volcano erupting

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2. The most vulnerable industries are being devastated

The tech industry deserves much of the credit for the stock market's rebound. The big five (AppleAlphabetMicrosoftAmazon, and Facebook) have all approached all-time highs, or even set them in recent weeks, and stocks in areas like cloud computing and e-commerce have surged as well. It's clear why: Tech has been mostly insulated from the effects of the pandemic, and some areas like e-commerce, video streaming, and gaming are even benefiting from it.

That strength -- which may be more vulnerable than it looks -- has obscured the fact that a number of other industries have been devastated by the pandemic. Those include travel, entertainment, restaurants, retail, real estate, construction, manufacturing, finance/banking, agriculture, transportation, media/advertising, and energy, as well as the public sector and non-profits. 

Some of those are getting hit harder than others, but almost all have experienced record losses in recent weeks due to shutdowns and the impact of the pandemic. For some industries, business as usual won't return until social distancing measures go away. The CEOs of both Delta and Boeing expect a full recovery for the airline industry to take two to three years, and Boeing CEO David Calhoun predicted that at least one of the major airlines would declare bankruptcy later this year.

Restaurants and retailers will struggle to bring customer traffic back to normal levels as long as the virus is lurking, and no one knows when Americans will be able to pack sports stadiums or concerts again, or visit a place like Disney World, without strict coronavirus protocols.

And while the tech sector makes up a significant percentage of the stock market's value, it employs relatively few Americans. It can't carry the economy on its own.

A man holding his face in front of a chart going down

Image source: Getty Images.

3. There's still a lot of pain ahead

There's been a lot of talk among the financial media, politicians, and corporate chieftains about the recovery, but this crisis is still young. The initial impact only started weeks ago, and the second- and third-order effects are still developing. In the last crisis, housing prices actually peaked in 2006, but the unraveling didn't begin until 2008.

We already know unemployment is at double digits and consumer spending is plunging, but the consequences of initial economic impacts and cultural shifts aren't fully clear yet. For example, what happens if work-from-home policies become permanent and corporations bail on high-priced office leases, as some have already announced? That doesn't just spell trouble for commercial landlords, but for pension funds, banks, and others holding those commercial mortgage-backed securities as well, as landlords could easily go into default. In total, office real estate in the U.S. was worth $2.5 trillion in 2018, and the industry looks much less secure than it did just a few months ago. With so many service workers now unemployed, there is a similar risk of collapse in the home rental market, worth $2.9 trillion according to Nareit and Costar. Malls were struggling before the pandemic, and are particularly poorly suited to social distancing, putting them at risk of default. And the student debt bubble, which has soared from $300 billion in 2003 to $1.5 trillion in inflation-adjusted dollars, also looks ripe to burst with so many now unemployed. With campuses now shut down, the value and the future of a college education are being questioned now more than ever.

Elsewhere, there's the risk of massive small business failures, as most have less than one month of cash on hand and can't survive more than six months of shutdown-like conditions. Then there's the prospect of another wave of infections that forces businesses to close and deals another setback to the economy.

Right now, after more than a 30% bounce, the stock market is priced as if the risk from the pandemic is almost entirely in the past, and the best-case scenario is the most likely. While it may be true that the worst of the outbreak has passed in terms of the death toll, there's still plenty of economic risk ahead -- especially as the response to the outbreak and the reopening of the economy need to be carefully managed.

Optimism never runs in short supply on Wall Street or corporate board rooms, but during this crisis the usual embellishment and positivity have turned into outright magical thinking. 

Don't be fooled by the market's recent rally. At these prices, there's a lot more that could go wrong than right.