I had a personal experience in 1999. I knew some people at work that were exhuberant about their individual stock picking prowess. I even received some tips from a gardner at work. I remembered the story you outlined and told him to get out. I tried to tell him everything was overvalued, but he kept coming back with "things are different now". He subsequently lost all his gains by 2002. I felt bad for him. I've been looking for this sign every time now. Remember 2007? How many people do you know are flipping houses? I know quite a few people doing it now. I think this is a sign. The coming interest rate hikes will have an effect IMO. We may see 2007 all over again, but it will be market related not sub prime related (it's very hard to get a loan now). If the real estate market crashes again, I think it will come back quickly. Who knows? No one. Just my opinion. YMMV.
In 1999, when did you sell all your stocks and move to cash? When did you reenter the market in full?
In 2007, when did you sell all your stocks and move to cash? When did you reenter the market in full?
Have you caught every bit of the "Trump rally" since November 2016?
The problem with all these "thoughts" is that they are not actionable. The fact is that every dollar of S&P 500 purchased in 1999 is worth more now. Every dollar of S&P 500 or VTSAX is up since 2007. Every dollar since November 2016 is up. And the odds of having purchased all your money at peaks is low.
So yes, the market seems overvalued. But it has for years, and still it goes up. It may go down, suddenly or for a long time, but what steps are you going to take that are actionable? I keep seeing people say they wish they could have another 2008-2009, but I question how many people with cash sitting on the sidelines went all in at a 20% drop in late 2008, only for the market to drop another 30-35% from there. How many timed it perfectly in February 2009, then dumped everything back in that month to triple their money since. Maybe you did like me, kept most invested, but only gradually rolled new money in, catching many gains, but missing out on many more.
I have come to realize that it is impossible to time the market, unless you want to miss out on what the market can do for you. Put in whatever you can invest, understand the risk, and then invest for the longest time frame you can. It has always worked out to date. Maybe it won't next time, but what do you or any of us know that all the money in the market does not? I'm all in with every extra dollar, every two weeks. The market might crash, but with a high savings rate and commitment to investing, the portfolio continues to go up. And it will recover over time if it drops.