So is it Bubble Alert Time? Yep. Am I worried about the U.S. stock market’s being overinflated? Nope. How come? Because stock prices don’t seem all that unreasonable, considering how companies’ profits and asset values have grown in the past six-plus years. This time, it’s the “alternative investments”–hedge funds, private equity funds, commodities and commercial real estate–where bubbles are building.

Here’s why. Ever since the stock bubble burst in 2000, giant investors like pension funds and endowments have poured money into alternatives. “Many investors now see alternatives as the cure-all for the boom/bust cycle of [stocks] and the low yields that bonds offer,” says Jan Loeys, head of global market strategy for JP Morgan Securities. Wall Street, which gets much higher fees on alternatives than from boring old stocks and bonds, has encouraged the trend. The Street gets an annual fee of maybe 1 or 1.5 percent of assets for managing stocks, but 2 percent of assets plus 20 percent of profits on many alternatives.

Loeys recently wrote a report asking publicly what many Wall Streeters are asking privately: “Are Alternatives the Next Bubble?” His answer: some commodities and real estate are bubbles. Other assets’ prices have gotten very high but probably aren’t bubbles.

Loeys, who’s based in London, told me that he began thinking about bubbles a year ago because he travels a lot, and wherever he went, people told him that alternatives were safe because everyone was buying them. “The more I heard that,” he told me, “the more I said, ‘I’ve heard this stuff before’.”

I’m nowhere as analytical as Loeys, but when I read the financial news, I shudder. Day after day, I hear about hedge funds’ growing power–we’re up to almost 9,000 funds with $1.225 trillion in assets, according to Hedge Fund Research, from about 3,600 with $456 billion at the start of 2000. To you, this may mean they’ll grow forever. To me, it feels like something bad’s about to happen. Sure, some hedge-fund investors will make out well. But the average new player is almost certain to be disappointed, because the more hedge funds there are chasing the same opportunities, the less profitable those opportunities become.

Then there’s public equity, most of which goes to corporate buyouts. These funds are on track to raise more than $350 billion in capital this year, according to Thomson Financial. That’s more than six times the level in 2003, and it implies perhaps $1.4 trillion in takeovers. That’s a lot of deals. It can’t possibly end well.

Yet another danger signal is that retail investors are being given a chance to run with the big hedge-fund dogs without meeting the Securities and Exchange Commission requirement of being a “qualified client” with a net worth of at least $1.5 million. It’s globalization. Funds of hedge funds are becoming a hot item on the London Stock Exchange. “It’s a way for someone with $20,000 or $30,000 to invest in a portfolio of hedge funds,” says Sabby Mionis, whose CMA Global Hedge went public in June. These funds, which aren’t registered here, say they’re not being offered to any U.S. citizens–but who’s going to stop you if you buy them on the LSE after they start trading? Players like Harris Associates and Goldman Sachs are in this game, and a company run by Tom Lee, a legendary U.S. private-equity investor, is seeking to join them. By my math, if these funds hit their targets, a third of what your money earns will go to fees and expenses. Seems expensive.

Since I’m writing about bubbles, why haven’t I mentioned housing? Because while prices in some markets are still overheated, I don’t think it’s a bubble. The S&P and Wil-shire dropped 50 percent in 19 months. Oil and natural gas have fallen sharply overnight. I don’t think anything that deep or fast is on tap for house prices. But if you borrowed 95 percent–or 100 percent–of the purchase price, even a small drop can put you underwater.

A final thought. Excesses in alternative assets don’t involve you directly because you’re not a public or corporate pension fund or an endowment. But if you’re a taxpayer or you plan to retire with a pension or to pay college or graduate-school tuition sometime, your money’s in this game indirectly. I thought you’d like to know.