Investors may be enjoying the party in global stock markets, but they also need to be aware of when it’s time to leave, Vikram Mansharamani, academic and author of Boombustology told CNBC Monday.

February turned out to be a stellar month for global stock markets: The S&P 500 and Dow Jones industrial average hit new record highs, London’s blue-chip FTSE-100 index surpassed a peak last set in 1999 and Japan’s Nikkei surged to a 15-year high.

At this stage, it’s very clear that the reward may be very limited and the risk is very evident – just look at valuation levels. So for that reason alone I think caution is warranted, Mansharamani, a senior fellow at Harvard University, said on the side lines of the Global Financial Markets Forum in Abu Dhabi.

Central bank bond-buying programs, such as the Bank of Japan and more recently the European Central Bank. have helped bolster stock markets. Asked whether this liquidity meant stocks would remain well-supported for now, Mansharamani likened the rally to a party.

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Traders work on the floor of the New York Stock Exchange in New York City.

There’s a great party underway, the question is what time of the evening is this party at?, he said.

Are we at it 5.30-6 pm at night and the cute girls have yet to arrive or is it 11 pm or 2 am when the most likely knock on the door is not the attractive young lady but the police and they are going to call the party off. I don’t know where we are; it doesn’t feel like it’s 7pm, it feels like it’s after midnight, Mansharamani added.

You could probably have a wonderful time, a potentially lucrative time but it’s a dangerous time too, so let’s not fool ourselves, he said.

Rene Nourse, principal and managing director at Urban Wealth Management, told CNBC Asia earlier on Monday that she expected the blue-chip Dow to hit 20,000 and the S&P 500 index to touch 2,300 by year-end.

That would mark gains of a further 10 percent for the Dow and 9 percent for the S&P 500 from current levels.

Nourse said that while a bumpy ride could be expected for U.S. markets, there is scope for further gains.

I don’t think we’re in a bubble and this is not the same kind of rally as in the 1990s, there is room to grow, she said.

Still, Mansharamani, whose book Boombustology takes an in-depth look at big swings in markets and economies, said that headwinds for U.S. companies, such as wage pressure and the impact of the strong dollar, are emerging.

Yes liquidity is present as a support but investing is a balancing act right now, he said.

We are losing a bit of steam, but more importantly we are seeing some drying up of liquidity, he said.

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