How do you know when a stereo sounds good?

To me, mikem explained it best.

Well, without reading all the answers, it's when I can crank it up, go into another room in the house and my ears think it sounds like there is a band playing live in the living room.  The genre really doesn't matter but especially with Jazz or Classical

How about this it’s very simple and you don’t need 

all the bullshit theory’s or work for NASA. 
It sounds good when ever you think it sounds good. 
It’s your music it’s your place of living it’s your stereo 

when you think it sounds good that’s all that matters 

there it is plain and simple 

When you turn in on and listen...its trilling.When you get an album by an artist you like and play it and say WOW that sounds great....

When you play a album and the artist or group sound like they are playing live ,in your room....