The S/E ratio seems to point to an overvalued market right now. I'd like to start putting money in an index but am leaning toward waiting until the overvaluation ends.
To me this is a tradeoff of risk between (a) losing some money if and when S&P contracts to "normal" valuation, vs. (b) definitely losing money to inflation using an online savings account. I suppose the risk distills to the question of whether S&P contraction be greater or less than inflation.
In this interpretation my options are (a) put the money in the index anyway, and accept that long term gains will still be good; (b) leave in the savings and wait; (c) hybrid: put some in index.
Perhaps there are different options/interpretations. Am I seeing this problem correctly?
