I believe it is Einstein that said “Everything is relative”. It is my belief as well. We hear so many “experts” on TV and in the financial press that stocks or certain assets are cheap. Well, the question should always be, compared to WHAT ? One person might compare prices to 3 or 6 months ago, another will compare to historic, multi year , trends and price values and come to a completely different opinion.
Bennet Sedacca, president of Atlantic Advisors, has compiled beautiful graphics here in his excellent market commentaries, of the tales of different bubbles. It shows clearly the folly of the pundits of long term investing, so often heard by market commentators. The important lesson here, if you invest at the wrong time, ie high valuation level, then the “long term” might be 20 years or more for your investment to show a positive return, as is the case currently with the Jappanese stock market and numerous other examples in stocks etc. The long term might even be eternity in some cases, and I don’t think people these days have long term time horizons for their investments anyway.
Further, you must be able to short as well, as it gives you an extra tool to use in difficult market conditions as now, and even might exist for a couple of years to come. Shorting however is more of an art and very difficult to master pschycologically, and that is probably why less than 1 % of the population will ever be able to do it.