The next American wealth boom has officially begun.
It may not feel like it for many Americans. But with the Dow breaching 14,000, shareholders and investors have recovered the more than $8 trillion in wealth lost during the recession and attained levels of paper wealth they haven't seen since the Roaring Oughts.
The stock market has gone from wealth destroyer to the nation's largest manufacturer of new millionaires and billionaires. The market moves are creating a new virtuous cycle of confidence for the wealthy. A new survey from Spectrem Group shows that millionaire confidence in the economy hit the highest level in two years, led by their bullishness on the economy and corporate earnings.
The big question now is what the next Gilded Age will look like, who will benefit and how long the market-fueled prosperity will last.
The population of millionaires in America is now at or above its 2007 high. According to Spectrem Group, the wealth research firm, there are about 9 million American households with investible assets of $1 million or more.
The final tally for 2012 is not yet released, but George Walper, president of Spectrem Group, said he expects 2012 and 2013 to to approach, or even match the all-time high of 9.2 million in 2007.
"I don't think it will go much beyond the all-time high because real-estate prices have not fully recovered," Walper said. He added that after the tax rates for the wealthy were set in January, "they had a lot more confidence in how to plan and move forward."
The population of individual millionaires (as opposed to households) rebounded to its all-time high two years ago. According to CapGemini, there were 3.35 million millionaires in North America in 2011, up from 3.2 million in 2007. Their total wealth in 2011 was just shy of the 2007 peak, at $11.7 trillion.
Other measures show a similar resurgence of wealth at the top. The total wealth of the Forbes 400 hit $1.7 trillion in 2012, topping the record of $1.58 trillion in 20008. The average net worth of the Forbes lister topped $4.2 billion – the highest ever.
There has been a massive reshuffling in the world of wealth, where millionaires and billionaires have fallen out of the top and been replaced by the freshly minted rich. Billionaires like hedge-funder Phil Falcone, real-estate tycoon Tim Blixseth and banking chief Sandy Weill fell off the Forbes list, while Facebook's Mark Zuckerberg, Under Armour's Kevin Plank and Spanx founder Sara Blakely burst on to the list after 2008.
Other members of the One Percent are returning after earlier collapses. Whether it's Sheldon Adelson, the casino king who lost more than 90 percent of his paper fortune, then earned it back, or Netflix CEO Reed Hastings, who saw his fortune more than triple in recent weeks, the stock market is quietly restoring massive fortunes.
According to the Federal Reserve, the top one percent saw a turnover of more than a third between 2007 and 2009, meaning that a third of them fell off and were replaced by the new, new money.
Those new millionaires and billionaires are spending big.
Prices for highly prized art, wine, vintage cars, jewels watches and other collectibles are soaring past their 2007 highs. Last year, Sotheby's sold more than $4 billion worth of collectibles, including the $11.9 million "Scream" painting by Edvard Munch, which set a new record for a work of art sold at auction.
This year's collectible-car sale at Scottsdale blew past its pre-crisis sales record, racking up $223 million in sales, compared to $163 million in 2008.
"It's almost a little shocking," said Craig Jackson, CEO of Jackson-Barrett, the auto auctioneer.
Prices for homes in the richest enclaves of the country are also touching bubble levels. The average home price in Aspen is now more than $4 million, and last year saw the sale of the highest-priced co-op ever sold in Manhattan, at $52 million. There are now several homes on the market priced at $100 million or more – including a mansion just listed in Dallas priced at $135 million – echoing the nine-figure deals of 2005 to 2009.
The waiting lists for new, six-figure Ferraris and Lamborghinis are stretching to more than a year, also a return to pre-crisis levels.
Yet spending on other forms of conspicuous luxury – like private jets, yachts, handbags and big bling – is still at a fraction of its former pace. And investment advisers say that while the wealthy have their wealth back, their mindset is different.
(Read more: Ultra-rich Spend More on 'Experience', Less on Bling)
"The fear is still there," said Stephen Martiros, a Boston-based, independent consultant to individual investors and family offices. "It's like they've been in a car crash. And it was far worse than they imagined. They may be driving again, in a new car on the same roads, but they're taking the corners a lot slower."
That means investing for stability and income rather than growth and risk. Martiros said that wealthy investors have more money in cash, alternative investments, real-estate and other assets that won't swing as much as stocks.
"The big change is reducing volatility," he said. "The big allocation is toward things that don't move a lot."
That means that many of today's richest investors may be missing out on the market rally. But for today's wealthy, it's worth the peace of mind.