From Sheldon:
Most stems have a "minimum insertion" mark that shows how high it may safely be set. If you can see this mark, the stem is too high. If your stem doesn't have such a mark, a good rule of thumb is that there should be at least 2 inches/50 mm of stem inside the fork.
I'll also add that if you have an extended steer tube that you built a lot of spacers into, the wedge should end up at or below where the top tube meets the head tube.